What is the relationship between correlation and the risk of the portfolio's rate of return? i. Higher correlation means greater risk reduction ii. Higher correlation means lower risk reduction iii. Lower correlation means lower risk reduction iv. Lower correlation means greater risk reduction v. None of the above
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- Which one of the following statements is correct? Group of answer choices The lower the average return, the greater the risk premium. The greater the volatility of returns, the greater the risk premium. The lower the volatility of returns, the greater the risk premium. The risk premium is not affected by the volatility of returns. The risk premium is unrelated to the average rate of return.Which of the following statements is most correct? A. Combining positively correlated assets having the same expected return results in a portfolio with the same level of expected return and a lower level of risk. B. Combining negatively correlated assets having the same expected return results in a portfolio with the same level of expected return and a lower level of risk. C. Combining positively correlated assets having the same expected return results in a portfolio with a lower level of expected return and a lower level of risk. D. Combining negatively correlated assets having the same expected return results in a portfolio with a lower level of expected return and a lower level of risk.Which of the following would not be acceptable as a measure of basic investment risk? a)Expected Return b) Range of Returns c)Variance of Returns d)Standard Deviation of Returns
- 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 does high value of standard deviation mean on risk-return ratio?Which of the following measures reflects the excess return earned on a portfolio per unit of its systematic risk a. Treynor’s measure b. Sharpe’s measure c. Jensen’s measure d. Total measure
- Clearly explain the difference between systematic risk and non-systematic risk and discuss the relationship between beta and the expected rate of return on an investment.List which of the following statement(s) concerning risk are correct? 1. Nondiversifiable risk is measured by beta. II. The risk premium increases as diversifiable risk increases. III. Systematic risk is another name for nondiversifiable risk. IV. Diversifiable risks are market risks you cannot avoid.How does standard deviation and variance affect portfolio risk, more so than expected return?
- Some financial theorists consider the variance of the distribution of expected rates of return to be a good measure of uncertainty. Discuss the reasoning behind this measure of risk and its purpose.Beta is which of the following: A) standard deviation. B) total risk. C) Beta is the relationship which is between an investment's return, and the market return. D) unsystematic risk.Portfolio standard deviation is negatively associated with the covariance among the assets in the portfolio. Select one: True False