Question
Risk associated with a portfolio is always less than the
weighted average of risks of individual items in the portfolio due to _______                              I.       Diversification of risks                            II.       The fact that all accounts in a portfolio have different Beta                           III.       The fact that risks in all the accounts in a portfolio will not materialize simultaneouslySolution
Risk associated with a portfolio is always less than the weighted average of risks of individual items in the portfolio due to diversification of risks. This means that the risk is spread out as all individual items in a portfolio will not behave in unidirectional manner or the risks in all the individual items in a portfolio will not materialize simultaneously. The market Beta of each item is also different and therefore, the market risk associated with each is also different thereby reducing the overall impact on a well diversified portfolio.
A and B started a business by investing sum in the ratio 4:7 respectively for 6 and 8 months respectively. If annual profit earned by B is Rs.2100, then...
A and B started a business with investments of Rs. 36000 and Rs. 48000 respectively. After 4 months, A doubled his investment. If the total profit at th...
A and B started a business by investing Rs.450 and Rs.600 respectively. After 8 months, A increased his investment by Rs.850. Find the ratio of annual p...
‘A’ and ‘B’ invested Rs. 5000 and Rs. 4200, respectively in a business, together. After 6 months, ‘A’ withdrew 35% of his initial investment...
A and B started a business with investments in the ratio 11:10 respectively. After 10 months, C joined them with an investment 40% more than the ...
‘A’, ‘B’ and ‘C’ started a business by investing Rs. 2500, Rs. 4500 and Rs. 3500, respectively. After 4 months, ‘B’ left and ‘A’ and...
- X and Y invested Rs. 48,000 and Rs. 36,000 respectively in a business. After 4 months, Z joined them with an investment of Rs. 30,000. If the annual profit...
A and B started a business by investing Rs.420 and Rs.540 respectively. After 5 months, A increased his investment by Rs.900. Find the ratio of annual p...
John and David began a business investing Rs. 50,000 and Rs. 40,000 respectively. Six months later, Emma joined with Rs. 30,000. If the yearly profit wa...
A and B enter into partnership. A invests some money at beginning, B invests thrice the amount after 6 months and C invests double the amount after 3 mo...
Relevant for Exams:
