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Which of the Following Is True of the Mean-Standard Deviation

Question 7

Multiple Choice

Which of the following is true of the mean-standard deviation diagram?


A) It plots means on the X-axis and standard deviations on the Y-axis of all feasible portfolios.
B) When investors employ risk-free borrowing to increase their holdings in a risky investment,the risk of the portfolio increases.
C) If the risky investment has a positive weight,and the graph has a mean return for the risky investment that is larger than the return of the risk-free asset,the slope of this line is negative.
D) The graph of portfolios of two perfectly positively correlated,but risky investments,has the same shape as the graph for a portfolio of a riskless and a risky investment.

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