Please answer both parts of the question and explain if possible. A financial pl

Question

Please answer both parts of the question and explain if possible.

A financial planner is examining the portfolios held by several of her clients. The portfolios are described below. Identify which portfolio It likely to have the smallest standard deviation. portfolio consisting of about 30 technology stock portfolio containing Microsoft, Apple Computer, and Google portfolio consisting of about 3 randomly selected stocks A portfolio containing only Microsoft stock portfolio consisting of about 30 randomly selected stocks

Explanation / Answer

Answer is
a portfolio consisting of about 30 randomly selected stocks

Much less risk when you invest in multiple companies. Which is a smaller standard devation.
Standard deviation is a measure of volatility. Having 30 randomly selected stocks (which theoretically would cover several different sectors and industries) is likely to have less volatility than 30 stocks in the same sector or only a few stock

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