What is the primary goal of portfolio diversification? A) To maximize returns B) To eliminate all risk C) To reduce unsystematic risk D) To increase leverage
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- The amount invested is one of the required inputs in a portfolio optimization model. True or FalseWhat does it mean that portfolio diversification can reduce risk, and how does the efficient frontier logically fit into this discussion? include correlation, asset allocation, and asset classes or benchmarks in your answer.Explain the differences between an ‘efficient portfolio’ and an ‘efficient market'
- Which of the following investment strategies involves generating a higher expected rate of return through increasing risk? a. Leverage b. Value at risk c. Diversifying d. Hedging riskCapital asset pricing theory asserts that portfolio returns are best explained by:a. Economic factors.b. Specific risk.c. Systematic risk.d. Diversification.Portfolio theory as described by Markowitz is most concerned with:a. The elimination of systematic risk.b. The effect of diversification on portfolio risk.c. The identification of unsystematic risk.d. Active portfolio management to enhance return.
- Q. Markowitz theory indicates to create and construct a portfolio of assets to maximize returns within a given level of risk , or to devise one with a desired,specified and expected level of return with the least amount of risk.Under this broader concept,answer the following: a) Justify , why an optimal portfolio should lie on security market line curv? b) Being an efficient market investor , justify how an efficient frontier curve can be helpful for you in portfolio selection process ?A well-diversified portfolio is designed to: a) Minimize risk b) Eliminate risk c) Maximize profit d) Guarantee returnsThe efficient frontier represents: a) The set of investments with the lowest risk b) The set of investments with the highest return c) The set of portfolios offering the highest return for a given level of risk d) The set of portfolios offering the lowest return for a given level of risk