The process of selecting securities in a manner that explicitly considers the standard deviations and correlations of the securities is known as efficient
A) allocation
B) returns
C) diversification
D) risk allocation

Question

Quizplus · Accepted Answer

The process described is an approach to diversification, where the focus is on selecting securities with low correlations to each other to reduce overall portfolio risk. This is known as an efficient diversification strategy. Choice A (allocation) may involve diversification, but it does not explicitly consider standard deviations and correlations. Choice B (returns) is an outcome of investing and is not a process for selecting securities. Choice D (risk allocation) is not a common term used in finance, and it is not clear how it relates to the process described.

The Process of Selecting Securities in a Manner That Explicitly