Which of the Following Statements Is Most Correct

question 29

Multiple Choice

Which of the following statements is most correct?

• A) It is possible to have a situation where the market risk of a single stock is less than the market risk of a portfolio of stocks.
• B) The market risk premium will increase if, on average, market participants become more risk averse.
• C) If you selected a group of stocks whose returns are perfectly positively correlated, then you could end up with a portfolio for which none of the unsystematic risk is diversified away.
• D) Statements a and b are correct.
• E) All of the statements above are correct.

---

Definitions:

Network Externality

A situation where the value of a product or service increases as the number of users expands.

Standardization

The process of developing and implementing technical standards to ensure the compatibility, safety, and quality of products and services.

Software Applications

Programs designed to perform specific tasks or functions for the user.

Network Externality

A phenomenon where the value or utility a user derives from a good or service depends on the number of users of compatible products.