You Randomly Select Stocks and Add Them to Your Portfolio

question 53

Multiple Choice

you randomly select stocks and add them to your portfolio, which of the following statements best describes what you should expect?

• A) Adding more such stocks will increase the portfolio's expected rate of return.
• B) Adding more such stocks will reduce the portfolio's beta coefficient and thus its systematic risk.
• C) Adding more such stocks will have no effect on the portfolio's risk.
• D) Adding more such stocks will reduce the portfolio's market risk but not its unsystematic risk.
• E) Adding more such stocks will reduce the portfolio's unsystematic, or diversifiable, risk.

---

Definitions:

Physical Health

The state of the body being free from illness or injury and the capacity of the body to perform daily tasks effectively.

Arousal

A state of heightened physiologic and psychological activity.

Human Immune System

The human immune system is a complex network of cells, tissues, and organs that work together to defend the body against disease-causing pathogens.

Branches

Divisions or subdivisions of a field or subject, often representing areas of specialization or different aspects of a larger discipline.