Active portfolio risk is defined as  Group of answer choices the return difference between the portfolio and the benchmark the standard deviation of the return of the benchmark portfolio the standard deviation of the return difference between the portfolio and the benchmark the standard deviation of the return of the actively-managed portfolio none of the above.

Q: process

A: The optimal portfolio for any investor would include both risk free assets & risky assets. The…

Q: Economy Probability Stock A Stock B Recession -30% -20% 10% 5% 40% 15% Average Boom 0.25 0.50 0.25…

A: Formula for standard deviation in every state of economy is SD =(A-A bar)2*P where A=Return of stock…

Q: As the number of stocks in a portfolio increase, the portfolio’s systematic risk can either increase…

A: Solution: When an investor invests in equity market, it get exposed to two types of risk- a)…

Q: Portfolio standard deviation is negatively associated with the covariance among the assets in the…

A: The portfolio standard deviation is the financial measure which computes the investment risk and…

Q: How does the creation of a portfolio reduce risk? What type of assets should be included in a…

A: Introduction Portfolio: Any combination of financial assets, such as stocks, bonds, and currency, is…

Q: what is a zero cost strategy in portfolios

A: A zero cost strategy is a business strategy or decision that doesn’t have nay expenses. It doesn’t…

Q: Differentiate between (a) stand-alone risk and(b) risk in a portfolio context

A: Investors can categorize the risks in two types. One is diversifiable risk and other one is…

Q: Discuss the factors to be considered in choosing a preferred portfolio when taking into account the…

A: A portfolio is the combination of various assets with varying returns and risks profile. A well…

Q: Which of the following factors is most likely to affect the level of systematic risk in a portfolio?…

A: Systematic risk-It is a risk that is impossible to completely avoid as the risk is inherent to the…

Q: In what circumstances would you use one of the available risk measurements used in Modern Portfolio…

A: Modern portfolio theory refers to the theory of investment that allows the investors for…

Q: Critically discuss the effect of diversification on portfolio risk. Is there any limit of…

A: A portfolio is the mixture of securities managed by the portfolio manager. We can take the amount in…

Q: What is the difference between active and passive portfolio management

A: Active Portfolio management is process of managing assets which are created with the aim of…

Q: 1. The diversifiable risk of a portfolio: a. Is correlated with systematic risk. b. Can be made…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Assess how the Modern Portfolio Theory (MPT) may be used by investors to classify, estimate, and…

A: Modern portfolio theory is the investment related theory that allows investors to manage their risk…

Q: Explain the relationship between risk and return in portfolio management!

A: Risk refers to an adverse possibility of something to get happen. Risk is the possibility of loss.…

Q: Why does standalone risk differ from portfolio risk? Explain and give examples! Relates your answer…

A: While making an investment, an investor is required to thoroughly examine all types of risks and…

Q: True or false: The most important characteristic in determining the expected return of a…

A: Portfolio diversification is a strategic approach to risk management in investment that involves…

Q: explain the assertion that the relationship between the standard deviation on a portfolio an the…

A: Answer: The relationship between the standard portfolio deviation and the standard portfolio…

Q: 1. What are some fixed-income portfolio benchmarks available and why are they used?

A: Market-capitalization-weighted indices like Citigroup World Government Bond Index and Barclays…

Q: What is definitions of this?   Systematic risk  Risk free rate of return  Market rate of…

A: Capital asset pricing model (CAPM) can be used to compute the return expected by the investors by…

Q: if asset A has lower volatility than asset B, then it contributes less to the overall volatility…

A: Volatility is change in expected rate of assets from the mean return and it shows the risk involved…

Q: The risk of the portfolio depends not only on the individual risks of the assets but also on the…

A: A portfolio refers to a collection or combination of financial assets held by an individual,…

Q: The risk associated with the overall market is referred to as _____ risk. a. unsystematic b.…

A: (a) Unsystematic risk also known as nonsystematic risk which refers to the risk that is unique for…

Q: A well-diversified portfolio is most likely to have: Both systematic and unsystematic risk Only…

A: The diversification is considered as a process of elimination of all the unsystematic risk in the…

Q: ine the difference between Passive and Active Strategies for a fixed

A: The portfolios are managed by the experienced fund managers and depending objective and mission of…

Q: Unsystematic risk: is compensated for by the risk premium. is measured by standard deviation. is…

A: Unsystematic risk is the risk that the company faces on its own. It is different from systematic…

Q: Write the formula for the portfolio return and risk Write the formula for expected returns and…

A: Portfolio return and Risk is that which arise when the investor will deposit his money in more then…

Q: Discuss the role of risk-free assets in the Markowitz Portfolio Theory.

A: Harry Markowitz always focused on lowering the risk and diversification in order to maximize the…

Q: ich of the following will not reduce risk in a portfolio?   Select one: a.   Selecting two…

A: Portfolio risk :- A portfolio is a combination of various assets that carries a risk that the value…

Q: According to modern portfolio theory, pair-wise covariance is more important to total portfolio risk…

A: According to modern portfolio theory, every investment's risk and return characteristics should not…