What is the typical relationship between the standard deviation of an individual common stock and the standard deviation of a diversified portfolio of common stocks? The individual stock's standard deviation will be higher

Finance Dec 27, 2020

What is the typical relationship between the standard deviation of an individual common stock and the standard deviation of a diversified portfolio of common stocks? The individual stock's standard deviation will be higher. The individual stock's standard deviation will be lower The standard deviations should be equal There is no relationship

Expert Solution

A) The individual stock standard deviation will be higher

As portfolio have less risk than an individual stock

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote