Which of the following guidelines are appropriate for inclusion in a portfolio management policy?
I.diversify among different types of securities and across industry and geographic lines
II.determine the risk level and financial situation of the individual investor
III.utilize beta to help align the portfolio to the risk level of the investor
IV.minimize the standard deviation of each security in the portfolio.
A) I, II and IV only
B) II, III and IV only
C) I, II and III only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

I. diversifying the portfolio is a basic principle of portfolio management. 
II. analyzing the risk level and financial situation of the individual investor is essential in order to create an appropriate portfolio. 
III. beta is a measure of a security's volatility compared to the overall market, which can help align the portfolio to the risk level of the investor. 
IV. minimizing the standard deviation may not always be the best approach as some investors may prefer more volatility to achieve higher returns.

Which of the Following Guidelines Are Appropriate for Inclusion in a Portfolio