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Risk Management: Question 3 Solution

Think you have a full understanding of the risk management tools and techniques? Test your knowledge with this sample question from our Risk Management Professional Certificate course.

Q. What would happen to the standard deviation of the annual return for the portfolio in the previous question if we assumed that the stock returns were positively correlated?

A. Standard deviation of the portfolio return would remain unchanged

B. Standard deviation of the portfolio return would increase

C. Standard deviation of the portfolio return would decrease

D. Impossible to tell how the standard deviation of the portfolio return would change

Reveal the Answer

The answer is B) Standard deviation of the portfolio return would increase

What is the Risk Management Professional Certificate?

The Risk Management Professional Certificate is a comprehensive survey of the practice of Risk Management. The major types of risk are identified, risk management tools and techniques are reviewed and financial regulation is covered. Delegates will work through the annual risk report of a publicly traded financial institution. A number of case studies are analyzed to illustrate key principles of risk measurement and management.

“The course was stimulating and the professor was energetic, knowledgeable and passionate. As an operations risk management professional and non-financial person, I felt this course was rewarding and a great investment.”

– Megan Telste (Risk Management Professional Certificate 2016)

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