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The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio because the market portfolio: Multiple Choice has specific risk. offers lower returns. has less systematic risk. diversifies risk.

Respuesta :

Parrain

Answer: Diversifies risk

Explanation:

The main purpose of having a portfolio is to be able to diversify risk so that a total loss is not made if things do not go well. As such, well diversified portfolios are able to reduce their unsystematic risk.

Individual stock on the other hand, cannot be diversified and so have unsystematic risk which makes their standard deviations(risk) higher.  

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