Business, 08.11.2019 06:31 dommalb

Portfolio managers pick stocks for their clients’ portfolios based on the investment objective of the portfolio and several other factors. one key consideration is each stock’s contribution to portfolio risk and its statistical relationship with the portfolio’s other stocks. based on your understanding of portfolio risk, which of the following statements are true? check all that apply. a) the market risk component of the total portfolio risk can be reduced by randomly adding stocks to the portfolio.

b) the risk in the portfolio will increase if more stocks that are negatively correlated with other stocks are added to the portfolio.

c) the portfolio's risk is not the weighted average of the individual stock standard deviations.

c) when returns on stock a increases, returns on stock b also increases. in general, this would mean that stocks a and b are positively correlated.

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