The standard deviation of returns of an inefficient portfolio is __________ the standard deviation of an efficient portfolio,provided both portfolios have equal expected returns.

A) lower than
B) higher than
C) the same as

Question

The standard deviation of returns of an inefficient portfolio is __________ the standard deviation of an efficient portfolio,provided both portfolios have equal expected returns.

A) lower than
B) higher than
C) the same as

Quizplus · Accepted Answer

If two portfolios have the same expected return,but one portfolio is efficient and one portfolio is inefficient,we find that the standard deviation of the returns of the inefficient portfolio is higher than the standard deviation of an efficient portfolio.

The Standard Deviation of Returns of an Inefficient Portfolio Is