If a Stock Portfolio Is Well Diversified, Then the Portfolio

question 349

Multiple Choice

If a stock portfolio is well diversified, then the portfolio variance:

• A) Will equal the variance of the most volatile stock in the portfolio.
• B) May be less than the variance of the least risky stock in the portfolio.
• C) Must be equal to or greater than the variance of the least risky stock in the portfolio.
• D) Will be a weighted average of the variances of the individual securities in the portfolio.
• E) Will be an arithmetic average of the variance of the individual securities in the portfolio.

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Definitions:

Monobromination Products

Products resulting from the substitution of a single hydrogen atom in an organic molecule with a bromine atom.

Tetramethylcyclobutane

A cyclic hydrocarbon with the formula C8H16, consisting of a cyclobutane ring with four methyl groups attached to it.

Monobromination Product

The single bromine atom addition product of an organic molecule, usually achieved through a selective bromination reaction.

Reaction

An operation where several reactants undergo a transformation to become different substances, known as products.