The Addition of a Risky Security to a Fully Diversified

question 79

Multiple Choice

The addition of a risky security to a fully diversified portfolio:

• A)must decrease the portfolio's expected return.
• B)must increase the portfolio beta.
• C)may or may not affect the portfolio beta.
• D)will increase the unsystematic risk of the portfolio.
• E)will have no effect on the portfolio beta or its expected return.

---

Definitions:

Cluster Sampling

A sampling technique where the population is divided into clusters, and a random sample of these clusters is selected to represent the whole population.

Pulitzer Prize

The Pulitzer Prize is an award for achievements in newspaper, magazine and online journalism, literature, and musical composition within the United States.

Publisher

An individual or company engaged in the preparation and issuing of printed, digital, or recorded material for public sale or distribution.

Simple Random Sample

A subset of individuals chosen from a larger set where each individual has an equal probability of being selected.