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___________ is a simple measure of the risk inherent in stock returns. The inflation rate Correlation...

___________ is a simple measure of the risk inherent in stock returns.

The inflation rate

Correlation

The risk premium

Standard deviation

Reductions in the variance or risk in a portfolio of stocks can only be accomplished when the correlation among the stocks is:

None of the above

Equal to zero

Less than zero

Equal to one

Less than one
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Answer #1

Standard deviation is a simple measure of the risk inherent in stock returns. (the wider the standard deviation of the amount of return on your money, the riskier the investment. )

Reductions in the variance or risk in a portfolio of stocks can only be accomplished when the correlation among the stocks is: Less than zero (variance will be least if correlation is -1).

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