The riskiness of individual assets
A) should be considered for the asset in isolation.
B) should be considered in the context of the effect on overall portfolio volatility.
C) should be combined with the riskiness of other individual assets in the proportions these assets constitute the entire portfolio.
D) should be considered in the context of the effect on overall portfolio volatility and should be combined with the riskiness of other individual assets in the proportions these assets constitute the entire portfolio.

Question

Quizplus · Accepted Answer

The riskiness of individual assets should be evaluated in the context of how they affect the overall portfolio's volatility, taking into account the diversification benefits and the proportion of each asset within the portfolio. This approach helps in understanding the contribution of each asset to the portfolio's risk profile, leading to more informed investment decisions.

The Riskiness of Individual Assets