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- why can variance/volatility of returns be a misleading measure of risk for an individual asset held as part of a portfolioHow do an investment's required rate of return vary with perceived risk? Explain with an example?How does the creation of a portfolio reduce risk? What type of assets should be included in a diverse portfolio? Why should they be included?
- In order to benefit from diversification, the returns on assets in a portfolio must: Answer a. Not be perfectly positively correlated b. Have the same idiosyncratic risks c. Be perfectly positively correlated d. Be perfectly negatively correlatedWhich are the different assets that have the potential to be combined efficiently in a portfolio that will provide an optimal risk-return relationship for investors?When it comes to investment performance, what statistical notion do many portfolio managers employ to reflect risk?
- 1. Define the components of holding period return. Can any of these components be negative? 2. How do you understand an investment risk and what statistic tools can be used to measure it?What is meant by excessive portfolio turnover? Which behavioral bias is primarily responsible for this effect, and how does this bias result in this effect? How does excessive portfolio turnover decrease an investors returns?What does it mean that portfolio diversification can reduce risk, and how does the efficient frontier logically fit into this discussion? include correlation, asset allocation, and asset classes or benchmarks in your answer.
- What is the best way to measure of risk for an asset held in isolation, and which is the best measure for an asset held in a diversified portfolio?When assessing investment performance, what statistical notion do many portfolio managers employ to describe risk?Which of the following is NOT a way to to reduce revenue portfolio risk? Group of answer choices Revenue diversification Reducing the proportion of a riskier revenue Relying on a single revenue source Increase the proportion of a more stable revenue source