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)B and C.
E)none of the above.

Question

Quizplus · Accepted Answer

The riskiness of individual assets should be considered in the context of the effect on overall portfolio volatility (option B) as well as combined with the riskiness of other individual assets in the proportions these assets constitute the entire portfolio (option C). By analyzing both the individual riskiness of assets and how they fit within a portfolio, investors can make more informed decisions about their investments. Option A is not sufficient, as an asset's riskiness may change depending on its relationship with other assets in a portfolio.

The Riskiness of Individual Assets