Portfolio a Has but One Security, While Portfolio B Has

question 8

True/False

Portfolio A has but one security, while Portfolio B has 100 securities.Because of diversification effects, we would expect Portfolio B to have the lower risk.However, it is possible for Portfolio A to be less risky.

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Definitions:

Random Selection

A method of sampling in which participants are chosen from a larger population entirely by chance, ensuring that every individual has an equal probability of being selected.

Random Assignment

Assignment of participants in an experiment to groups in such a way that each person has an equal chance of being placed in any group.

Convenience Sampling

A sampling method where participants are selected based on their availability and willingness to take part, rather than using random selection.

Dependent Variable

In an experiment, the condition that may or may not change as a result of changes in the independent variable.