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:

Cash Payments

Outflows of cash to settle obligations or purchase goods and services.

Equipment

Tangible property used in operations, such as machinery, computers, and furniture, which has a useful life longer than one fiscal period.

Accounts Payable

Liabilities or debts owed by a company to suppliers or creditors for goods or services purchased on credit.

Purchases Journal

A specific type of accounting record where a business records all transactions related to the acquisition of goods intended for resale or for use in production.