If a Stock Portfolio Is Well Diversified, Then the Portfolio

question 27

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 variances of the individual securities in the portfolio.

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Definitions:

1848

A key year known for widespread revolutions across Europe, focusing on demands for political and social reforms.

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The state or quality of being equal, especially in status, rights, or opportunities.

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California Gold Rush

A period of migration to California following the discovery of gold in 1848, significantly impacting the state's development and demographics.