Which of the Following Statements Is Correct

question 129

Multiple Choice

Which of the following statements is correct?

• A)A stock's beta is less relevant as a measure of risk to an investor with a well-diversified portfolio than to an investor who holds only that one stock.
• B)If an investor buys enough stocks, he or she can, through diversification, eliminate all of the diversifiable risk inherent in owning stocks. Therefore, if a portfolio contained all publicly traded stocks, it would be essentially riskless.
• C)Portfolio diversification reduces the variability of returns (as measured by the standard deviation) of each individual stock held in a portfolio.
• D)A security's beta measures its nondiversifiable, or market, risk relative to that of an average stock.

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Definitions:

Project Head Start

Early childhood intervention program funded by the U.S. federal government that provides low-income children with nutritional, health, and educational services, as well as helps parents become involved in their children’s development.

Federal Government

The national government of a federated state, which shares sovereignty with its sub-national units.

Economically Disadvantaged

Pertaining to individuals or groups who lack financial resources or face economic hardship.

Cognitive-Developmental Perspective

A theoretical viewpoint that analyzes and describes how human cognition unfolds and changes over the course of childhood and adolescence.