As Diversification Increases, the Unsystematic Risk of a Portfolio Approaches

question 67

Multiple Choice

As diversification increases, the unsystematic risk of a portfolio approaches

• A) 1.
• B) 0.
• C) infinity.
• D) (n −1) × n.

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Definitions:

pH

A measurement system designed to indicate the level of acidity or alkalinity in water-based solutions, ranging from 0 (highly acidic) to 14 (highly alkaline), with the midpoint, 7, representing a neutral pH.

Buffer

A solution that resists changes in pH when acid or alkali is added to it.

Ionic Substance

A chemical compound composed of ions held together by electrostatic forces termed ionic bonding, typically formed when a metal reacts with a nonmetal.

Grinding Process

A machining process that uses an abrasive action to achieve a desired shape or surface finish on a material.