Which of the following statements regarding portfolio standard deviation is accu
ID: 2813821 • Letter: W
Question
Which of the following statements regarding portfolio standard deviation is accurate?
The higher the coefficient of correlation between the securities in the portfolio, the greater the reduction in the portfolio's standard deviation.
There is a linear relationship between the securities' correlation coefficient and the portfolio's standard deviation.
The degree to which the portfolio standard deviation is reduced depends on the degree of correlation between securities.
None of the above
a)The higher the coefficient of correlation between the securities in the portfolio, the greater the reduction in the portfolio's standard deviation.
b)There is a linear relationship between the securities' correlation coefficient and the portfolio's standard deviation.
c)The degree to which the portfolio standard deviation is reduced depends on the degree of correlation between securities.
d)None of the above
Explanation / Answer
Answer : Option C is accurate.
Explantion :Yes,the given statement the degree to which the portfolio standard deviation is reduced depends on the degree of correlation between securities is accurate and correct because there is relationship between the correlation and the standard deviation of portfolio involved.
Thanks....
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.