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The risk of a portfolio asset being affected by market changes is called systematic risk.

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True

False

True. The risk of a portfolio asset being affected by market changes is called systematic risk.

An efficient portfolio is likely to consistently beat the market.

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True

False

False. Efficient portfolios are not likely to beat the market.

Modern Portfolio Theory is based on the relationship between risk and volatility.

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True

False

False. Modern Portfolio Theory is based on the relationship between risk and reward.

Efficient portfolios achieve low volatility by _______.

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Asset allocation

Investing only in low-risk securities

Controlling the markets

Asset allocation. Efficient portfolios achieve low volatility by diversifying.

An efficient portfolio seeks the highest return for the________.

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Highest risk

Lowest volatility

Highest volatility

Lowest risk

Lowest volatility. The theory helps you to locate the best-performing set of assets for the lowest amount of volatility.

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