10 Questions
What does beta measure in relation to a security or portfolio?
The volatility of a security or portfolio relative to the overall market
What is the best form of diversification in a portfolio?
Investing in securities with negative correlation
What does a correlation of +1 indicate between two securities?
Perfect positive correlation
What is asset allocation in portfolio management?
The distribution of capital among various asset classes
What does an ideal portfolio consist of in terms of correlation?
Securities with as much negative correlation as possible
What is the primary factor affecting asset allocation in portfolio management?
Investment objectives
How does diversification in a portfolio affect overall risk?
Decreases overall risk
What is the expected return of a portfolio calculated as?
The weighted average of the expected returns of each asset
What does a correlation of -1 indicate between two securities?
Perfect negative correlation
What does variance measure in relation to a security's returns?
The average deviation of returns from the mean
Explore the concepts of portfolio management in finance, including the types of securities and investments that make up a portfolio. Learn about the risk-return trade-off and how financial decisions are influenced by managing risk and seeking returns.
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