2. Quantitative Methods
Portfolio Math — Quiz
Test your understanding of portfolio math with 5 practice questions.
Practice Questions
Question 1
Which mathematical concept is used to quantify the degree to which the returns of two assets move in tandem?
Question 2
What is the primary benefit of combining assets with low or negative correlation in a portfolio?
Question 3
The expected return of a portfolio is calculated as the weighted average of the expected returns of its individual assets. If a portfolio has three assets with the following characteristics: Asset A: weight $0.4$, expected return $8\%$\, Asset B: weight $0.3$, expected return $12\%$\, Asset C: weight $0.3$, expected return $10\%$. What is the expected return of the portfolio?
Question 4
Which of the following statements about portfolio variance is true?
Question 5
If two assets have a correlation coefficient of $-1$, what does this imply for portfolio diversification?