Holding other factors constant, a stock portfolio has more volatility when its individual stock volatilities are ________ and its individual stock returns have _______ correlations.
A)high; low
B)low; high
C)low; low
D)high; high

Question

Quizplus · Accepted Answer

A stock portfolio has more volatility when its individual stock volatilities are high and the correlations between individual stock returns are also high, as both factors contribute to increased overall portfolio risk.

Holding Other Factors Constant, a Stock Portfolio Has More Volatility