Skip to content
#
Question:

When a risk-free asset is combined with a portfolio of risky assets, which of the following is least accurate?

A
The variance of the resulting portfolio is a weighted average of the returns variances of the risk-free asset and of the portfolio of risky assets.

Explaination

This statement is not correct; the standard deviation of returns for the resulting portfolio is a weighted average of the returns standard deviation of the risk-free asset (zero) and the returns standard deviation of the risky-asset portfolio.

Take more free practice tests for other ASVAB topics with our cfa mock exam now!