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Sagot :
The portfolio contains a significant amount of specific risk is most likely correct for diversified stock portfolio that exhibits higher standard deviation than market index.
What is a portfolio?
Individual investors may have portfolios, or they may be managed by financial professionals, hedge funds, banks, and other financial institutions. The idea that a portfolio should be created with the investor's risk appetite, time horizon, and investment goals in mind is one that is widely acknowledged. The goal is to maximize expected return and minimize risk when deciding on asset allocation. A is a Pareto-optimal portfolio if no other portfolio dominates A. For the Markowitz portfolio selection issue, the collection of Pareto-optimal returns and hazards is referred to as the Pareto efficient frontier. A different method of portfolio diversification has recently been proposed in the literatures that incorporates risk and return into the optimization issue.
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