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:

Preexisting Duty

Preexisting duty refers to an obligation that a party is already legally required to perform, which cannot be used as consideration for a new contract.

Past Consideration

Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain.

Consideration

In contract law, it is something of value exchanged between parties as part of an agreement, serving as the reason or inducement to enter into the contract.

Legally Sufficient

A term indicating that an act, document, or process meets all necessary legal requirements and standards.