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:

New World

A term historically used to refer to the Americas, indicating their discovery by European explorers during the Age of Exploration.

Disease

A disorder of structure or function in a human, animal, or plant, especially one that produces specific symptoms or that affects a specific location and is not simply a direct result of physical injury.

Discipline

Training to ensure proper behavior, often through regulations and orders, or the controlled behavior resulting from such training.