For a Portfolio of 40 Randomly Selected Stocks, Which of the Following

question 105

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 average of the betas of the individual stocks.
• D) The beta of the portfolio is equal to the average of the betas of the individual stocks.
• E) The beta of the portfolio is larger than the average of the betas of the individual stocks.