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

question 11

Multiple Choice

In a portfolio of three randomly selected stocks, which of the following could NOT be true, i.e., which statement always 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 lower than the highest of the three betas.
• E) None of the above statements is obviously false, because they all could be true, but not necessarily at the same time.

Evaluate the financial impact of accepting special orders on net operating income.

Understand the impact of cost allocations on product and business unit profitability.

Identify and assess the implications of bottleneck operations on production decisions.

Distinguish between relevant and irrelevant costs in various decision-making scenarios.

---

Definitions:

Predicting Behavior

The process of forecasting future actions based on past and present data or trends.

Final Goal

The ultimate objective or aim that one seeks to achieve at the end of a process or project.

Behavioral Science

A field of study that examines the interactions among organisms in the natural world, focusing on their behaviors.

Explaining Behavior

The process of providing reasons or rationale for why individuals or groups act in a certain way.