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Questions and Answers
What does beta measure in relation to a security or portfolio?
What does beta measure in relation to a security or portfolio?
- The expected return of a portfolio
- The overall market risk
- The volatility of a security or portfolio relative to the overall market (correct)
- The correlation between two securities
What is the best form of diversification in a portfolio?
What is the best form of diversification in a portfolio?
- Investing in securities with no correlation
- Investing in securities with the same correlation
- Investing in securities with negative correlation (correct)
- Investing in securities with positive correlation
What does a correlation of +1 indicate between two securities?
What does a correlation of +1 indicate between two securities?
- Perfect negative correlation
- Perfect positive correlation (correct)
- No correlation
- Partial positive correlation
What is asset allocation in portfolio management?
What is asset allocation in portfolio management?
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What does an ideal portfolio consist of in terms of correlation?
What does an ideal portfolio consist of in terms of correlation?
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What is the primary factor affecting asset allocation in portfolio management?
What is the primary factor affecting asset allocation in portfolio management?
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How does diversification in a portfolio affect overall risk?
How does diversification in a portfolio affect overall risk?
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What is the expected return of a portfolio calculated as?
What is the expected return of a portfolio calculated as?
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What does a correlation of -1 indicate between two securities?
What does a correlation of -1 indicate between two securities?
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What does variance measure in relation to a security's returns?
What does variance measure in relation to a security's returns?
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