Risk can be divided into that which can be diversified away and that which canno
ID: 2700893 • Letter: R
Question
Risk can be divided into that which can be diversified away and that which cannot. The risk that cannot be diversified away is called market risk. Since professional investors; those that manage large pools of money always diversify they have portfolios exposed to market risk. A portfolio%u2019s risk is summarized by the number of assets divided by the standard deviation of each asset%u2019s returns over the last five years.True or False
Risk can be divided into that which can be diversified away and that which cannot. The risk that cannot be diversified away is called market risk. Since professional investors; those that manage large pools of money always diversify they have portfolios exposed to market risk. A portfolio%u2019s risk is summarized by the number of assets divided by the standard deviation of each asset%u2019s returns over the last five years.
True or False
Risk can be divided into that which can be diversified away and that which cannot. The risk that cannot be diversified away is called market risk. Since professional investors; those that manage large pools of money always diversify they have portfolios exposed to market risk. A portfolio%u2019s risk is summarized by the number of assets divided by the standard deviation of each asset%u2019s returns over the last five years.
True or False
Explanation / Answer
I belive that is false because the risk of the portfolio is summarized by the weighted average of the standard deviation of each asset rather than the way it is decribed in the question.I