The Idea That There Is a Limit to the Reduction

question 69

Multiple Choice

The idea that there is a limit to the reduction of portfolio risk due to diversification is

• A) contradicted by both the CAPM and the single-index model.
• B) contradicted by the CAPM.
• C) contradicted by the single-index model.
• D) supported in theory, but not supported empirically.
• E) supported both in theory and by empirical evidence.

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Definitions:

Ethical Audit

A systematic evaluation of an organization's adherence to moral principles and standards in its business operations and overall conduct.

Organizational System

The structured arrangement of roles, responsibilities, and processes within an organization, which determines how it functions and achieves its objectives.

Ethical Audit

An examination of an organization's practices, procedures, and products to ensure they align with ethical standards and values.

Organizational System

The structured arrangement of components and processes in an organization that work together to achieve business objectives.