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Of the following statements regarding the standard deviation of a portfolio, which one is correct? Standard deviation is used to determine the amount of risk

Of the following statements regarding the standard deviation of a portfolio, which one is correct?

  • Standard deviation is used to determine the amount of risk premium that should apply to a portfolio.
  • The greater the diversification of a portfolio, the greater the standard deviation of that portfolio.
  • The standard deviation of a portfolio is equal to a weighted average of the standard deviations of the individual securities held within the portfolio.
  • The standard deviation of a portfolio can often be lowered by changing the weights of the securities in the portfolio.
  • The standard deviation of a portfolio is equal to the geometric average standard deviation of the individual securities held within that portfolio.

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