A Well-Diversified Portfolio Is Defined as

question 42

Multiple Choice

A well-diversified portfolio is defined as

• A) one that is diversified over a large enough number of securities that the nonsystematic variance is essentially zero.
• B) one that contains securities from at least three different industry sectors.
• C) a portfolio whose factor beta equals 1.0.
• D) a portfolio that is equally weighted.

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Definitions:

Net Income Available

Net income available refers to the portion of a company's net income considered available for distribution or reinvestment, typically after accounting for dividends and other obligations.

Income Taxes

Taxes levied by a government directly on income, both earned (salaries, wages) and unearned (dividends, interest).

Preferred Dividends

Preferred dividends are regular dividend payments made to preferred shareholders before any dividends can be issued to common shareholders.

Dividends

Payments made by a corporation to its shareholder members. It can be issued in various forms, such as cash payment, stocks, or other forms.