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:

Peter Drucker

A prominent Austrian-born American management consultant, educator, and author, known for his influential writings on business management practices and principles.

Setting Priorities

The process of determining the order in which tasks, projects, or goals should be addressed based on their importance, urgency, and impact.

Management By Objectives (MBO)

A management strategy focusing on aligning the goals of employees with the objectives of the organization through participative goal setting and performance assessment.

Budget Adjustments

Modifications made to a budget to reflect changes in the availability of funds or expenditures.