Which of the Following Statements Is CORRECT

question 65

Multiple Choice

Which of the following statements is CORRECT?

• A) A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.
• B) A portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market,assuming the stocks all have the same standard deviations.
• C) A two-stock portfolio will always have a lower beta than a one-stock portfolio.
• D) If portfolios are formed by randomly selecting stocks,a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
• E) A stock with an above-average standard deviation must also have an above-average beta.

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Definitions:

Restrictive Clause

A part of a sentence that limits or specifies the meaning of its subject and is essential to its structure, often introduced by "that," "who," or "which."

Nonrestrictive Clause

A clause that adds extra information to a sentence but is not essential to understand its main point.

Relative Pronouns

Pronouns that introduce relative clauses, functioning as connectors between clauses.

Nonrestrictive

Refers to clauses or modifiers in grammar that provide additional information without limiting or defining the main clause.