This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Discuss whether the standard deviation of a portfolio is, or is not, a weighted average of the ... (Read 62 times)

go.lag

  • Hero Member
  • *****
  • Posts: 667
on: Jul 11, 2018
Discuss whether the standard deviation of a portfolio is, or is not, a weighted average of the standard deviations
  of the assets in the portfolio. Fully explain your answer.
 
  What will be an ideal response?

Question 2

Which of the following ratios would be the most useful to assess the risk associated with a firm
  being able to pay off its short-term line of credit?
 
  A) the acid test ratio B) the fixed asset turnover
  C) the operating profit margin D) return on equity


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

tuate

  • Sr. Member
  • ****
  • Posts: 332
Reply #1 on: Jul 11, 2018
Answer to Question 1

The standard deviation of a portfolio is not a weighted average of the standard deviations of the assets in the portfolio.
If the portfolio is well-diversified then it should have a standard deviation that is lower than most or all of the assets
placed in that portfolio. Betas can be averaged, but standard deviations cannot, due to the diversifiable risk that is
contained in the standard deviation but not reflected by beta.

Answer to Question 2

A


go.lag

  • Member
  • Posts: 667
Reply 2 on: Jul 11, 2018
YES! Correct, THANKS for helping me on my review

miss.ashley

  • Member
  • Posts: 371
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Famous people who died from poisoning or drug overdose include, Adolf Hitler, Socrates, Juan Ponce de Leon, Marilyn Monroe, Judy Garland, and John Belushi.

Did you know?

Women are two-thirds more likely than men to develop irritable bowel syndrome. This may be attributable to hormonal changes related to their menstrual cycles.

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Eat fiber! A diet high in fiber can help lower cholesterol levels by as much as 10%.

Did you know?

Egg cells are about the size of a grain of sand. They are formed inside of a female's ovaries before she is even born.

Menstrual cycle summary based on a 28-day (average) menstrual cycle. Menstrual cycle summary based on a 28-day (average) menstrual cycle.
Standard Schnauzer Standard Schnauzer
Dolores Huerta and Cesar Chavez, leaders of the United Farm Workers, discuss their 1968 strike of ... Dolores Huerta and Cesar Chavez, leaders of the United Farm Workers, discuss their 1968 strike of ...
Some Standard Shapes of Greek Vessels Some Standard Shapes of Greek Vessels
The average weight gain between Thanksgiving and New Year's Day is about a pound The average weight gain between Thanksgiving and New Year's Day is about a pound
Write the following in standard form Write the following in standard form
Video: Chemical Changes

For a complete list of videos, visit our video library