portfolio's risk is measured by the weighted average of the standard deviations of the securities in the portfolio It is this aspect of portfolios that allows investors to combine stocks and thus reduce the riskiness of their portfolios.

Question

Quizplus · Accepted Answer

A portfolio's risk is not measured by the weighted average of the standard deviations of the securities; it is measured by the portfolio's standard deviation, which considers both the individual risks and the correlations between the securities.

Portfolio's Risk Is Measured by the Weighted Average of the Standard