Which of the Following Statements Is Most Correct

question 47

Multiple Choice

Which of the following statements is most correct?

• A) If you add enough randomly selected stocks to a portfolio, you can completely eliminate all the market risk from the portfolio.
• B) If you form a large portfolio of stocks each with a beta greater than 1.0, this portfolio will have more market risk than a single stock with a beta = 0.8.
• C) Company-specific (or unsystematic) risk can be reduced by forming a large portfolio, but normally even highly diversified portfolios are subject to market (or systematic) risk.
• D) Answers a, b, and c are correct.
• E) Answers b and c are correct.

---

Definitions:

Record Keeping

The systematic process of creating, maintaining, and managing records or documents related to the operations and transactions of an entity.

Inventory Accounting

The process of valuing and managing inventories, focusing on the cost of goods sold, inventory valuation, and inventory management practices.

Physical Quantities

The measurable amount of a stock or resource, expressed in units of weight, volume, or count.

Ending Inventory

The aggregate sum of products ready for purchase at the closure of a financial period.