Final answer:
Total return' since total return is a measurement of the portfolio's performance and not a contributing factor to the variability of portfolio returns.The correct answer is 'B)
Step-by-step explanation:
The question asks which option is NOT related to the variability of a portfolio's returns. When considering factors that affect the variability, also known as volatility, of a portfolio's returns, we look at aspects such as:
- Security selection - the specific stocks, bonds, or other securities chosen for the portfolio.
- Market timing - the strategy of making buy or sell decisions of financial assets by attempting to predict future market price movements.
- Asset allocation - the process of distributing investments among different asset categories, such as stocks, bonds, and cash.
However, Total return is an outcome or measurement of the portfolio's performance and not a factor that contributes to the variability. Therefore, B) Total return is the correct answer as it is NOT related to the variability of a portfolio's returns but rather is a result of the other factors mentioned.
Hence, the answer is option b