Portfolio risk is measured via the individual risks of the assets in the portfolio. Discuss. (5...

Portfolio risk is measured via the individual risks of the assets in the portfolio. Discuss.

Expert Solution

Portfolio risk is is the combination of the individual risk of various shares in portfolio.

Portfolio risk is a combination of the overall systematic as well as unsystematic risk,so the systematic risk is the representation of the overall market risk which is associated with the movement of the portfolio so these systematic risk cannot be completely eliminated under any circumstances because the firm will always be having a risk of operating into the overall market.

Non-systematic risk which are also known as firm specific risk can be diversified and eliminated to a certain extent by addition of diverse stocks into the portfolio, so the portfolio is always a representation of combination of both systematic and unsystematic risk which are the representative of various stocks in the portfolio.

An investor should be always trying to manage the risk associated with the portfolio in order to maximize his overall rate of return.

jeff jeffy answered 1 year ago

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