Which of the Following Is Most Likely to Occur as You

question 74

Multiple Choice

Which of the following is most likely to occur as you add randomly selected stocks to your portfolio,which currently consists of three average stocks?

• A)The diversifiable risk of your portfolio will likely decline, but the market risk should not be expected to change.
• B)The diversifiable risk will remain the same, but the market risk will likely decline.
• C)Both the diversifiable risk and the market risk of your portfolio are likely to decline.
• D)The total risk of your portfolio should decline, and as a result, the expected rate of return on the portfolio should also decline.

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Definitions:

Sole Proprietorships

A type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.