Which of the following guidelines are appropriate for inclusion in a portfolio management policy?
I. Ddiversify 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

Guidelines for a portfolio management policy should include diversification across different types of securities, industries, and geographic lines (I), as well as determining the risk level and financial situation of the individual investor (II) to align the portfolio accordingly. The use of beta (III) can also be helpful in this process, but minimizing the standard deviation of each security in the portfolio (IV) may not always be the most important factor to consider.

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