A Portfolio Consisting of Every Stock Traded on the New

question 66

Multiple Choice

A portfolio consisting of every stock traded on the New York Stock Exchange would have

• A)diversified away all risk.
• B)diversified away idiosyncratic risk.
• C)diversified away market risk.
• D)much more risk than a portfolio containing only a few stocks.

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Definitions:

Classified Balance Sheet

A financial statement that groups a company's assets, liabilities, and equity into categorized sections for clearer analysis.

Permanent Accounts

Accounts that carry their balances over into the next accounting period, typically representing the asset, liability, and equity accounts.

Stockholders' Equity

The remaining value of a company's assets after all its debts have been paid, commonly known as shareholders' equity.

Prepayments

Payments made in advance for goods or services that will be received in the future, often recorded as assets on a balance sheet.