As Diversification Increases, the Standard Deviation of a Portfolio Approaches

question 11

Multiple Choice

As diversification increases, the standard deviation of a portfolio approaches

• A)0.
• B)1.
• C)infinity.
• D)the standard deviation of the market portfolio.

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Definitions:

Union Shop

A business that requires employees to join a union within a certain time period after being hired, ensuring the workplace remains under collective bargaining.

Closed Shop

A form of labor agreement in which an employer agrees to hire only members of a labor union.

Agency Shop

A workplace where non-union employees must pay a fee to the union for its services in negotiation without becoming full members.

Check-off

A procedure where an employer deducts union dues or other fees from an employee's wages and transfers them directly to the union or relevant body.