Portfolio a Has Only One Stock,while Portfolio B Consists of All

question 30

True/False

Portfolio A has only one stock,while Portfolio B consists of all stocks that trade in the market,each held in proportion to its market value.Because of its diversification,Portfolio B will by definition be riskless.

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Definitions:

Net Present Value

The differentiation in the now-value of cash transactions, both incoming and outgoing, over a defined period.

Profitability Index

Profitability Index is a financial metric that calculates the relative profitability of an investment by dividing the present value of future cash flows by the initial investment cost.

Benefit-Cost Perspective

A method of evaluating projects or decisions by comparing the benefits they will generate to the costs required to implement them.

NPV

Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.