What is the primary purpose of an equity curve in portfolio analysis?

To calculate the portfolio's standard deviation To visualize the performance of a portfolio over time To determine the correlation between assets in a portfolio To predict future market trends

What is the common practice for normalizing a portfolio when constructing an equity curve?

Scaling the portfolio to a starting investment value of Rs. 1,000 Using a logarithmic scale to represent portfolio growth Adjusting the portfolio values based on inflation Setting the initial investment value to Rs. 100

How is the daily fluctuation of a portfolio determined when constructing an equity curve?

By averaging the daily returns of all assets in the portfolio By calculating the standard deviation of the portfolio's daily returns By summing the daily variations in investment value across all stocks By using a complex mathematical formula involving covariance matrices

What insight can be derived by treating a portfolio as a single stock and calculating its standard deviation?

It reveals the correlation between the portfolio and the benchmark index It provides an estimate of the portfolio's expected return It helps determine the optimal asset allocation for maximum returns It represents the portfolio's variance, indicating its overall risk