pls pls help me... The most important determinant of an investment\'s portfolio
ID: 2642438 • Letter: P
Question
pls pls help me...
The most important determinant of an investment's portfolio risk is which of the following?
A. The standard deviation of the investment's return distribution
B. The variance of the investment's return distribution
C. The size of the investment
D. The correlation of the investment's returns with the returns of other investments in the portfolio
E. The risk-free rate of return
If a bank pays quarterly compounding on its savings accounts, the ending amount after one year on a $1,000 deposit will be less than if the bank paid annual compounding.
True
False
The most important determinant of an investment's portfolio risk is which of the following?
A. The standard deviation of the investment's return distribution
B. The variance of the investment's return distribution
C. The size of the investment
D. The correlation of the investment's returns with the returns of other investments in the portfolio
E. The risk-free rate of return
Explanation / Answer
The Most important determinant of an investments portfolio risk is the asset allocation. i.e size of the investment because a tactical investment allocation strategy is the most underrated.
Portfolio rebalancing & weighting are powerful risk managemement strategy.
2. False
Quarterly Comounding of $ 1000
1000(1+interest)1*4
annualy
1000(1+interest)
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