CFA CFA Level 1 Question of the Week – Portfolio Management

Question of the Week – Portfolio Management

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    • AdaptPrep
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      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:

      • 0.25
      • 0.8
      • 1.25
    • AdaptPrep
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      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.

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