Which One of the Following Statements Is Correct Concerning a Portfolio

question 319

Multiple Choice

Which one of the following statements is correct concerning a portfolio which consists of a risk-free asset and four stocks with individual betas of 1.1, 1.4, 1.5, and 1.8?

• A) The beta of the portfolio must be greater than 1.0.
• B) The expected return on the portfolio is equal to the market rate of return.
• C) The portfolio can have more than, less than, or the same amount of systematic risk as the market.
• D) A portfolio comprised of these five securities will eliminate all of the diversifiable risk.
• E) The risk of the portfolio must be less than the market level of risk.

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Definitions:

Type B Personality

A personality type characterized by a relaxed, patient, and easy-going nature, often contrasted with the more competitive and high-stress Type A personality.

Type A Personality

Type A personality is characterized by high levels of competitiveness, self-imposed stress, and a constant sense of urgency.

Perceive Major Life Changes

The recognition or awareness of significant transformations in one's personal life circumstances.

Chronic Sense

A persistent or long-standing feeling or perception, often associated with a particular attitude or outlook.