As the Number of Securities in a Portfolio Is Increased

question 23

Multiple Choice

As the number of securities in a portfolio is increased, what happens to the average portfolio standard deviation?

• A)It increases at an increasing rate.
• B)It increases at a decreasing rate.
• C)It decreases at an increasing rate.
• D)It decreases at a decreasing rate.

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Definitions:

Content Validity

The extent to which a test measures all aspects of the concept or behavior it is intended to assess.

Construct Validity

The extent to which a test measures what it claims to measure, demonstrating the accuracy of the concept or construct being tested.

Predictive Validity

The extent to which a score on a scale or test predicts future performance on a related outcome.

Parallel Form Reliability

A measure of reliability used to assess the consistency of the results of different forms of the same test.