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:

Nonshared Environment

The unique aspects of the environment that individuals experience differently, even within the same family, contributing to differences in their development and personality.

Individualist Cultures

Cultures that emphasize personal achievements and rights, prioritizing individual goals over group objectives.

Personality Traits

Enduring characteristics or behaviors that define an individual's patterns of thought, feeling, and behavior.

Humanist Psychology

A psychological approach that emphasizes personal growth, resilience, and the achievement of human potential.