Chartered Financial Analyst Level 1
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The diversification ratio of a portfolio is best described as the ratio of the:
A
Standard deviation of the equally weighted portfolio's returns to the average standard deviation of the individual securities' returns.
B
Standard deviation of the market-capitalization-weighted portfolio's returns to the standard deviation of the equally weighted portfolio's returns.
C
Average standard deviation of the individual securities' returns to the standard deviation of the market-capitalization-weighted portfolio's returns.