In a Portfolio of Three Different Stocks, Which of the Following

question 42

Multiple Choice

In a portfolio of three different stocks, which of the following could not be true?

• A) The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isola¬tion.
• 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 less than the beta of each of the individual stocks.
• D) The beta of the portfolio is greater than the beta of one or two of the individual stocks' betas.
• E) None of the above (that is, they all could be true, but not necessarily at the same time).

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Definitions:

SEC Rule 144

A regulation set by the Securities and Exchange Commission that outlines conditions under which restricted, unregistered, and control securities can be sold or offered for sale.

1934 Act

The Securities Exchange Act of 1934, which governs the trading of securities in the United States, including the secondary market.

Reporting Requirements

Obligations set by regulatory bodies that necessitate organizations to submit specific data within designated timeframes.

Registration Statement

A set of documents filed with a regulatory authority for the purpose of registering a new security for sale to the public.