Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks.
• B) The higher the correlation between the stocks in a portfolio,the lower the risk inherent in the portfolio.
• C) It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock.
• D) Once a portfolio has about 40 stocks,adding additional stocks will not reduce its risk by even a small amount.
• E) An investor can eliminate virtually all diversifiable risk if he or she holds a very large,well-diversified portfolio of stocks.

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Definitions:

Dissolve the Union

The concept referring to the secession of Southern states from the United States, leading to the Civil War.

Richmond

The capital city of the Commonwealth of Virginia in the United States, known for its rich history, particularly during the American Civil War as the capital of the Confederacy.

Slavery

A system in which individuals are owned by others, deprived of personal freedom, and forced to work without compensation.

American Citizenship

The status of being a citizen of the United States, with associated rights, duties, and privileges such as voting and protection under U.S. law.