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.

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Definitions:

Medical Science

A field of study focused on knowledge about human health, diseases, and the body’s functioning, aiming at the prevention, diagnosis, and treatment of illness.

Monopoly

A market condition where a single company or entity controls all or nearly all of the supply of a particular good or service.

Higher Classes

Denotes the social groups that occupy the top layers of the social hierarchy, often associated with greater wealth, authority, and privileges.

Stress Levels

A measure of the intensity of stress experienced by an individual or population, influenced by various psychological, physical, and environmental factors.