Which of the following statements is most correct?
A) The expected return on a portfolio of financial assets is equal to the summation of the products of the expected returns of the individual assets multiplied by the probability of each return being realized.
B) When adding new securities to a portfolio,the higher or more positive the degree of correlation between the new securities and those already in the portfolio,the greater the benefits of the additional portfolio diversification.
C) In portfolio analysis,we rarely use ex post (historical)returns and standard deviations,because we are interested in ex ante (future)data.
D) Portfolio diversification reduces the variability of returns on each security held in the portfolio.
E) All of the above statements are false.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is most correct?
A) The expected return on a portfolio of financial assets is equal to the summation of the products of the expected returns of the individual assets multiplied by the probability of each return being realized.
B) When adding new securities to a portfolio,the higher or more positive the degree of correlation between the new securities and those already in the portfolio,the greater the benefits of the additional portfolio diversification.
C) In portfolio analysis,we rarely use ex post (historical)returns and standard deviations,because we are interested in ex ante (future)data.
D) Portfolio diversification reduces the variability of returns on each security held in the portfolio.
E) All of the above statements are false.

Which of the Following Statements Is Most Correct