Which of the Following Statements Is Most Correct

question 57

Multiple Choice

Which of the following statements is most correct?

• A)A portfolio with a beta of minus 2 has the same degree of risk to the holder, relative to the market, as a portfolio with a beta of plus 2.However the holder of either portfolio could lower his or her exposure by buying some "normal" stocks.
• B)A stock with a beta of −1.0 has zero systematic (or market) risk.
• C)It is possible for a stock to have a positive beta even in situations where the correlation between the returns on it and those on another stock are negative.
• D)Diversifiable risk, which is measured by beta, can be lowered by adding more stocks to a portfolio.
• E)Statements a and c are both correct.

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Definitions:

ANOVA

Stands for "Analysis of Variance," a statistical method used to compare the means of three or more samples.

Randomized Block Design

An experimental design used to reduce the variability among experimental units by grouping them into blocks before randomly assigning treatments.

Matched Pairs Experiment

A statistical study design in which pairs of subjects are closely matched based on specific variables, and each pair is treated differently to compare outcomes.

Compare Populations

The statistical process of analyzing two or more groups to determine if there are significant differences between them, often through hypothesis testing or variance analysis.