The risk of a portfolio is simply equal to the weighted average return variance of the securities that comprise it.

Question

Quizplus · Accepted Answer

The risk of a portfolio is not equal to the weighted average return variance of the securities that comprise it. It is affected by the correlation among the securities in the portfolio and how their returns move together. This is known as diversification, and it can help to reduce overall risk. Therefore, the statement is false.

The Risk of a Portfolio Is Simply Equal to the Weighted