Risk in Investment Portfolios

This article discusses the concept of risk in investment portfolios. It explains how to calculate the standard deviation of a portfolio, which is a measure of its risk. The article also answers the question “What is a portfolio?” and provides a definition.

Questions

• How do you calculate the risk of an investment portfolio?
• What is a portfolio?

Answers

The risk of an investment portfolio can be calculated by using the standard deviation formula. The standard deviation is a measure of how spread out the returns of a portfolio are. A higher standard deviation indicates that the portfolio is more risky.

A portfolio is a group of assets that is owned by an investor. Investing in a single security is always more risky than investing in two or more securities. This is because if one security loses value, the other securities in the portfolio can help to offset the loss.