Portfolio Volatility True or false: If two stocks have the same standard deviation of 45 percent, then any portfolio of the two stocks will also have a standard deviation of 45 percent.
Diversification You are an investment adviser and a client makes the following statement:
I do not want a diversified portfolio since I will never get the highest possible return. How do you respond to your client?
Investment Opportunity Set You have a portfolio created from two assets. As you add more of the lower risk asset to your portfolio, the risk of your portfolio increases. What do you know about your current portfolio?
Minimum Variance Portfolio Why is the minimum variance portfolio important in regard to the Markowitz efficient frontier?