In a Portfolio of Three Randomly Selected Stocks, Which of the Following

question 11

Multiple Choice

In 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:

Incidental

Occurring alongside or as a minor accompaniment to something else, not central or primary.

Need for Achievement

A psychological drive that fosters the pursuit of accomplishing difficult tasks and meeting high standards of success.

NAch

N-Acetylcholine, a neurotransmitter involved in the activation of muscle action, learning, and memory.

Self-Actualization

A psychological concept referring to the realization or fulfillment of one's talents and potentialities, especially considered as a drive or need present in everyone.