Which of the following statements about the ‘Portfolio Theory’ section of the lecture material are TRUE:

The standard deviation of a portfolio of shares in two different companies will always be less than the weighted average of the standard deviations of the individual shares.
A share portfolio that follows a diversified market index is expected to offer a reasonably efficient trade-off between expected return and risk.

Question

Which of the following statements about the ‘Portfolio Theory’ section of the lecture material are TRUE: 
 
 The standard deviation of a portfolio of shares in two different companies will always be less than the weighted average of the standard deviations of the individual shares. 
 A share portfolio that follows a diversified market index is expected to offer a reasonably efficient trade-off between expected return and risk.

Answer

Neither of the statements are true (both are false)

Answer

Only statement 1 is true

Answer

Only statement 2 is true

Answer

Both statements are true (neither are false)

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Which of the following statements about the ‘Portfolio Theory’ section of the le...

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