As We Add More Uncorrelated Shares to a Portfolio Where

question 15

Multiple Choice

As we add more uncorrelated shares to a portfolio where the shares are held in equal weights, the benefit of diversification is most dramatic

• A) when there are more than 500 shares.
• B) when there are more than 1000 shares.
• C) after 20 shares have been added.
• D) at the outset.

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Definitions:

Confidence Interval

A series of values, yielded by sample statistical study, thought to encompass the value of an unrevealed population parameter.

Confidence Intervals

A sequence of values, garnered from samples, anticipated to cover the value of a yet-to-be-discovered population parameter.

Sampling Distribution

The probability distribution of a given statistic based on a random sample.

Central Limit Theorem

A statistical theory that states that the sampling distribution of the sample mean will approach a normal distribution as the sample size becomes larger, regardless of the shape of the population distribution.