The statement "A portfolio is less than the sum of its parts." means a diversified group of assets will be less volatile than the individual assets within the group. for reasons that are not well understood, the value of a portfolio is less than the sum of the values of its components. it is less expensive to buy a group of assets than to buy those assets individually. portfolio returns will always be lower than the returns on individual stocks.

The statement "A portfolio is less than the sum of its parts." means a diversified group of assets will be less volatile than the individual assets within the group. for reasons that are not well understood, the value of a portfolio is less than the sum of the values of its components. it is less expensive to buy a group of assets than to buy those assets individually. portfolio returns will always be lower than the returns on individual stocks.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 9MC

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QUESTION 4

The statement "A portfolio is less than the sum of its parts." means

		a diversified group of assets will be less volatile than the individual assets within the group.
		for reasons that are not well understood, the value of a portfolio is less than the sum of the values of its components.
		it is less expensive to buy a group of assets than to buy those assets individually.
		portfolio returns will always be lower than the returns on individual stocks.

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