skybugdylanH3282 skybugdylanH3282

Today at 1:15 PM
Business

Answered

A financial planner is examining the portfolios held by several of her clients. Which of the following portfolios is likely to have the smallest standard deviation

A. portfolio with 10 randomly selected international stocks

B A portfolio with 10 randomly selected stocks from US and international markets

C. A portfolio with 10 randomly selected US stocks

Based on your understanding of portfolio risk, identify whether each statement is true or false

A portfolio's risk is likely to be smaller than the average of all stocks standard diversification because diversification lowers the portfolio's risk
Because of the effects of diversifications, the portfolio's risk is likely to be more than the average of all stocks standard deviations

Portfolio risk will increase if more stocks that are negatively correlated with other stocks are added to the porfolio
The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio

Answer :

shahzaibnaeem37 shahzaibnaeem37

Today at 1:20 PM

Answer: A portfolio with 10 randomly selected US stocks will have the lowest standard deviation because all US stocks will have some form of co relation and move to some extent in the direction of the US market but international stocks will have very high standard deviations as they all are more likely to move in different directions.

A portfolio's risk is likely to be smaller than the average of all stocks standard diversification because diversification lowers the portfolio's risk

This statement is false because a portfolios risk can be both higher or lower than the average of all stocks because if the stocks have a negative co relation portfolios risk will be lower than the average of all Standard deviations and vice versa.

Portfolio risk will increase if more stocks that are negatively correlated with other stocks are added to the portfolio

This statement is False because portfolio risk will decrease if more stocks that are negatively correlated added to the portfolio.

The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio

This statement is true because unsystemeatic risk is Diversifiable risk.

Explanation:

Answer Link

Other Questions

At a large business, employees must report to work at 7:30 A.M. The arrival times of employees is approximately symmetric and mound-shaped with mean 7:22 A.M. a

An economic model is purposeful simplification of reality, whose function includes: A. Understanding the full complexity of the real world B. Predicting the beh

If the price level doubled and someone wanted to maintain the same level of purchasing power, the nominal quantity of money demanded must.a. also double.b. incr

If the reserve requirement is 20 percent, this banka. has $10,000 of excess reserves. b. needs $10,000 more reserves to meet its reserve requirements. c. needs

An economic model is purposeful simplification of reality, whose function includes: A. Understanding the full complexity of the real world B. Predicting the beh

Q1. Answer the following questions in one word:-1 The most abudant gas in the atmosphere is.2. The radio communications are made possible by.3. The atmosphere i

want astronaut food did for Chikki and ninu mother make for them

What Is The Initial Velocity Of A Single Molecule Of A Solid At A Certain Temperature ?

the latent heat of fusion of the ice is 80cal/ gm

Simplify(1/8+3/4) × (1/7)

Jose is a twenty-two year old who just finished college. He lives alone in a small apartment that he rents. Jose has saved up nearly all his earnings from vario

According to the establishment clause, the government is required to: 1. remain neutral toward all religions. 2. favor religious groups over nonreligious groups

Martin worried a lot about his job, which he chose specifically because it was very structured with clear rules and regulations. He carefully planned his career

A certain function is vertically stretched by a factor of 2, horizontally compressed by 1/4, and translated down 6. The new function is represented by f(x) = 6

Blueprints for a new house show Jim's bedroom is 1.5 inches by 2 inches. If the scale on the blueprints is 0.5 in = 4 ft, what are the actual dimensions of his

Deena is inviting 10 friends to a party. If she wants to spend no more than $120 on her guests, and dinner for each guest costs $8, what is the most can she spe

If SpongeBob had a container of PURPLE Poofkins , which color should he choose to cross it with for the BEST CHANCE of BLUE poofkins Complete the Punnett square

These are the first six terms of a sequence with a1=3 and a2=1: 3, 1, 8, 18, 52, 140, … Find a recursive formula for this sequence that is valid for n>2. Write

There are 250 freshman at Central High School. You survey 50 randomly selected freshman and find that 38 plan to go to the school party on Friday. How many fres

how to solve 2(5)(2root3)