Reading 51: Portfolio Management: An Overview-LOS a 习题精选 2011, investment, framework, potential, investor

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Session 12: Portfolio Management
Reading 51: Portfolio Management: An Overview

LOS a: Explain the importance of the portfolio perspective.

 

 

In the Markowitz framework, an investor should most appropriately evaluate a potential investment based on its:

A) effect on portfolio risk and return.

B) intrinsic value compared to market value.

C) expected return.

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Modern portfolio theory concludes that an investor should evaluate potential investments from a portfolio perspective and consider how the investment will affect the risk and return characteristics of an investor’s portfolio as a whole.

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The ratio of a portfolio’s standard deviation of return to the average standard deviation of the securities in the portfolio is known as the:

A) Sharpe ratio.

B) diversification ratio.

C) relative risk ratio.

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The diversification ratio is calculated by dividing a portfolio’s standard deviation of returns by the average standard deviation of returns of the individual securities in the portfolio.