Portfolio Management Q189

Statement 1: Standard deviation measures how different an actual investment outcome could be from what the investor expects.

Statement 2: Duration measures the sensitivity of a security or portfolio to a change in market interest rates.

Statement 3: Vega measures the sensitivity of a security (either a derivative or a security with derivative-like characteristics) to a change in the price volatility of the underlying asset.

Option : C
Explanation : All the statements are correct. Standard deviation measures how different an actual investment outcome could be from what the investor expects. While, duration measures the sensitivity of a security or portfolio to a change in market interest rates and vega measures the sensitivity of a security (either a derivative or a security with derivative-like characteristics) to a change in the price volatility of the underlying asset.

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