New investments must be considered in light of their impact on the risk and return of the portfolio of assets because the risk of any single proposed asset investment is not independent of other assets.

Question

Quizplus · Accepted Answer

The statement is true. New investments can affect the risk and return of the overall portfolio because the risk of any single asset is not independent of other assets in the portfolio. The effect of the new investment must be considered in the context of the entire portfolio to determine the potential impact on risk and return.

New Investments Must Be Considered in Light of Their Impact