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.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The statement "A portfolio is less than the sum of its parts." meansa 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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