A Portfolio of Three Randomly Selected Stocks, Which of the Following

question 108

Multiple Choice

a portfolio of three randomly selected stocks, which of the following could NOT be true, i.e., which statement always is false?

• A)The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation.
• B)The riskiness of the portfolio is greater than the riskiness of one or two of the stocks.
• C)The beta of the portfolio is lower than the lowest of the three betas.
• D)The beta of the portfolio is lower than the highest of the three betas.
• E)None of the above statements is obviously false, because they all could be true, but not necessarily at the same time.

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Definitions:

Interdependence

A condition where entities are mutually reliant on each other, such that the actions of one significantly affect the others in a social, economic, or ecological system.

Independence

refers to the state of being free from external control or influence, often used in the context of countries achieving sovereignty.

Mesopotamia

An ancient region located in the eastern Mediterranean, primarily in what is now Iraq, known as the "cradle of civilization" for its early developments in writing, law, and urbanization.