Portfolio Management【Reading 64】Sample
Which one of the following alternatives correctly outlines the importance of the portfolio perspective? A)
| Market participants should attempt to eliminate the unsystematic risk associated with each security by forming portfolios that will diversify away this risk. |
| B)
| Market participants should focus on the systematic risk of the components of a portfolio not the unsystematic risk of the components of a portfolio. |
| C)
| Market participants should analyze the risk-return trade-off of a portfolio as a whole, not the risk-return trade-off of the individual investments in a portfolio. |
|
The key underlying principle of the portfolio perspective is that market participants should analyze the risk-return trade-off of the portfolio as a whole, not the risk-return trade-off of the individual investments in the portfolio. |