Portfolio a Has but One Security, While Portfolio B Has

question 8

True/False

Portfolio A has but one security, while Portfolio B has 100 securities.Because of diversification effects, we would expect Portfolio B to have the lower risk.However, it is possible for Portfolio A to be less risky.

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Definitions:

Machinery

A category of physical equipment used in the production or manufacturing process.

Indirect Expenses

Costs not directly linked to the production of goods or services, such as office supplies and utility costs.

Benefits Received

A principle that taxes or charges should be levied according to the benefits a taxpayer receives from public expenditures or services.

Department

A distinct area, division, or branch of an organization focused on a specific set of tasks or functions.