The Reduction in Standard Deviation from a Well Diversified Portfolio

question 52

Multiple Choice

The reduction in standard deviation from a well diversified portfolio of 100 stocks will ______________ than that of a 200 stock portfolio.

• A) not be statistically significantly different
• B) be statistically significantly different
• C) equal to
• D) None of the options are correct

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Definitions:

Sacrifice Ratio

The sacrifice ratio is an economic concept that measures the cost of reducing inflation in terms of lost output or unemployment.

Disinflates

A process in which the rate of inflation decreases over time but does not turn negative.

Disinflation

A slowdown in the rate of inflation, indicating a reduction in the rate at which prices for goods and services rise over time.

Favorable Supply Shock

A situation in which the supply of goods increases, leading to lower prices and benefiting consumers.