In a Portfolio of Three Randomly Selected Stocks,which of the Following

question 97

Multiple Choice

In a portfolio of three randomly selected stocks,which of the following could NOT be true,i.e. ,which statement is false?

• A) The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation.
• B) The riskiness of the portfolio is greater than the riskiness of one or two of the stocks.
• C) The beta of the portfolio is lower than the lowest of the three betas.
• D) The beta of the portfolio is higher than the beta of one or two of the stocks in the portfolio.
• E) The beta of the portfolio is calculated as a weighted average of the individual stocks' betas.

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Definitions:

Marketable Title

Title for property to which the seller has legal title and against which there are no liens or restrictions of which the buyer is not aware.

Lien

A claim to property.

Real Property

Land and anything permanently attached to it, including buildings and natural resources.

Permanently Attached

Items that are fixed securely to a property in such a way that removing them would cause damage to the property or the items themselves.