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Solution
:
The variance of individual assets is measure of total risk. Further in a well diversified portfolio,
unsystematic risk of individual assets is not matter and only systematic risk will matter.
Therefore variance of a well diversified portfolio is a function of systematick risk which is
measured by Beta.
Hence statement given in question is false.

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SolutionThe variance of individual assets is measure of total ris.pdf

  • 1. Solution : The variance of individual assets is measure of total risk. Further in a well diversified portfolio, unsystematic risk of individual assets is not matter and only systematic risk will matter. Therefore variance of a well diversified portfolio is a function of systematick risk which is measured by Beta. Hence statement given in question is false.