Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks.
• B) The higher the correlation between the stocks in a portfolio,the lower the risk inherent in the portfolio.
• C) It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock.
• D) Once a portfolio has about 40 stocks,adding additional stocks will not reduce its risk by even a small amount.
• E) An investor can eliminate virtually all diversifiable risk if he or she holds a very large,well-diversified portfolio of stocks.

---

Definitions:

X

Often used as a variable or unknown value in mathematics.

Expression

A combination of variables, numbers, and operations without an equal sign.

A

Often used to denote a variable in equations or to represent a constant value in various mathematical contexts.

Positive Exponents

Refers to exponents that are greater than zero, indicating the number of times a base is multiplied by itself.