For a Portfolio of 40 Randomly Selected Stocks,which of the Following

question 25

Multiple Choice

For a portfolio of 40 randomly selected stocks,which of the following is most likely to be true?

• A) The riskiness of the portfolio is greater than the riskiness of each of the stocks if each was held in isolation.
• B) The riskiness of the portfolio is the same as the riskiness of each stock if it was held in isolation.
• C) The beta of the portfolio is less than the weighted average of the betas of the individual stocks.
• D) The beta of the portfolio is equal to the weighted average of the betas of the individual stocks.
• E) The beta of the portfolio is larger than the weighted average of the betas of the individual stocks.

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Definitions:

Superior

Higher in rank, quality, or importance; often used to describe someone or something that excels compared to others.

Declarative

Pertaining to a statement or expression that makes a statement or assertion, conveying information.

Conditional

Depending on specific conditions or stipulations to be met before something else can occur or be considered true.

Intimate

Characterized by a close personal association or familiarity, often relating to personal or private matters.