Which of the Following Statements Is CORRECT

question 109

Multiple Choice

Which of the following statements is CORRECT?

• A) A portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.
• B) A two-stock portfolio will always have a lower beta than a one-stock portfolio.
• C) If portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
• D) A stock with an above-average standard deviation must also have an above-average beta.
• E) A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

Grasp the requirements and implications of recent legal acts affecting securities regulation.

Understand the concept and examples of diversifying selection.

Grasp the principles and effects of stabilizing selection.

Recognize the role of natural selection on phenotypes and genotypes.

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Definitions:

Writing Requirement

A legal stipulation that certain contracts or agreements must be documented in writing to be enforceable.

Implied Warranty

A legal assumption in commerce that the goods or services sold meet certain quality standards, even if not explicitly stated by the seller.

Assignment

The transfer of rights, property, or obligations from one party to another.

Consideration

Something of value exchanged between parties to form a binding contract.