See how our partners can help you ace your CFA exams.
Question of the Week - Portfolio Management
An analyst is given the following information:
• The standard deviation of the equal-weighted portfolio is 20%.
• The standard deviation of the randomly selected security is 25%.
The diversification ratio of the randomly selected security is closest to:
Question of the Week - Portfolio Management 25 votes
0 ·
Comments
The diversification ratio is calculated as the ratio of the standard deviation of the equal-weighted portfolio to the standard deviation of the randomly selected security. Thus, the diversification ratio is 0.20/0.25 = 0.80.