Explain why each of the following statements is correct or incorrect: 17.a. Diversification reduces risk because prices
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Explain why each of the following statements is correct or incorrect:
17.a. Diversification reduces risk because prices of stocks do not usually move exactly together.
17.b. The expected return on a portfolio is a weighted average of the expected returns on the individual securities.
17.c. The standard deviation of returns on a portfolio is equal to the weighted average of the standard deviations on the individual securities if these returns are completely uncorrelated.
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