Which One of the Following Indicates a Portfolio Is Being

question 81

Multiple Choice

Which one of the following indicates a portfolio is being effectively diversified?

• A) An increase in the portfolio beta
• B) A decrease in the portfolio beta
• C) An increase in the portfolio rate of return
• D) An increase in the portfolio standard deviation
• E) A decrease in the portfolio standard deviation

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Definitions:

Regression Analysis

A statistical method for estimating the relationships among variables, allowing for prediction of one variable based on the value of others.

Error Variable

A variable that represents the difference between observed values and the values predicted by a model.

Distribution

In statistics, the way in which values of a variable or group of variables are spread or dispersed across possible values.

Coefficient of Determination

Represents the ratio of explained variance by the model to the total variance, indicating the model's explanatory power.