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James Maxwell
on Nov 03, 2024

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The variance of a portfolio of risky securities

A) is a weighted sum of the securities' variances.
B) is the sum of the securities' variances.
C) is the weighted sum of the securities' variances and covariances.
D) is the sum of the securities' covariances.
E) None of the options are correct.

Covariances

Covariance is a measure used in statistics to determine how much two random variables vary together.

Portfolio Variance

A measurement of the dispersion of returns of a portfolio, indicating the degree of investment risk.

Risky Securities

Financial instruments that carry a higher degree of uncertainty and a higher risk of loss, such as stocks.

  • Understand the calculation and implications of portfolio variance.
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Trenton WebsterNov 04, 2024
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