Which of the Following Statements Is CORRECT

question 5

Multiple Choice

Which of the following statements is CORRECT?

• A) An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks.
• B) The higher the correlation between the stocks in a portfolio,the lower the risk inherent in the portfolio.
• C) It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock.
• D) Once a portfolio has about 40 stocks,adding additional stocks will not reduce its risk by even a small amount.
• E) An investor can eliminate virtually all diversifiable risk if he or she holds a very large,well-diversified portfolio of stocks.

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Definitions:

Behavioral Disengagement

A coping strategy involving withdrawal from or avoidance of tasks or activities that are perceived as challenging or threatening.

Adaptive

Pertaining to an ability or modifications that enable an organism or system to adjust to different environments or conditions, enhancing survival or efficiency.

Competitive

Competitive refers to a situation or environment where individuals or groups compete against each other in order to achieve a goal or superiority.

Adaptive Coping

Strategies used to adjust to stressors in a healthy and constructive manner.