Which of the following statements is correct? The dollar return is a more useful measure to compare performance because it more accurately reflects the change in wealth of the investor. A dominant portfolio is one that has the highest risk and highest return within a set of portfolios. By adding stocks to your portfolio, it is possible to effectively eliminate nearly all of the market risk. None of these statements are correct.
Answer: None of these statements are correct
Explanation to the above answer
We can not say that only a dollar return is a more useful measure to compare performance because it more accurately reflects the change in wealth of the investor any for of return is useful to calculate and compare performance. Dominant Portfolio is part of the efficient frontier in modern porfolio theory. By adding properly diversified stock to the portfolio it is possible to effectively eliminate nearly all of the market risk and not only adding stocks to your portfolio, it is possible to effectively eliminate nearly all of the market risk so in total we can say that None of these statements are correct.
