Which two of the following options correctly give rules for portfolio theory? A) Portfolio returns are a weighted average of the expected returns on the individual investments. B) Portfolio standard deviation is greater than the weighted average risk of the individual investments, except for perfectly negatively correlated investments. C) Portfolio standard deviation is less than the weighted average risk of the individual investments, except for perfectly positively correlated investments. D) Expected returns are a weighted average of the portf
Which two of the following options correctly give rules for portfolio theory? A) Portfolio returns are a weighted average of the expected returns on the individual investments. B) Portfolio standard deviation is greater than the weighted average risk of the individual investments, except for perfectly negatively correlated investments. C) Portfolio standard deviation is less than the weighted average risk of the individual investments, except for perfectly positively correlated investments. D) Expected returns are a weighted average of the portf
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 21P
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7. Which two of the following options correctly give rules for portfolio theory?
A) Portfolio returns are a weighted average of the expected returns on the individual investments.
B) Portfolio standard deviation is greater than the weighted average risk of the individual investments, except for perfectly negatively correlated investments.
C) Portfolio standard deviation is less than the weighted average risk of the individual investments, except for perfectly positively correlated investments.
D) Expected returns are a weighted average of the portfolio return on the group of investments.
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