Asked by Abtin Hoseini on Jul 02, 2024
As the number of securities in a portfolio is increased, what happens to the average portfolio standard deviation?
A) It increases at an increasing rate.
B) It increases at a decreasing rate.
C) It decreases at an increasing rate.
D) It decreases at a decreasing rate.
E) It first decreases, then starts to increase as more securities are added.
Average Portfolio Standard Deviation
A measure of the volatility of all the assets in a portfolio, calculated as the square root of the variance of the portfolio's returns.
- Comprehend the impact of diversification on portfolio risk.
Learning Objectives
- Comprehend the impact of diversification on portfolio risk.
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