Which of the Following Statements Is True Regarding the Risk

question 56

Multiple Choice

Which of the following statements is true regarding the risk and return a U.S. investor would have experienced if she had invested in foreign stocks during the period from 1986 to 2005?

• A)Although foreign stocks would have increased her portfolio returns, the risk would have increased significantly as well.
• B)Foreign stocks did not perform as well as U.S. stocks during this period when the relative risk is considered.
• C)The beta of her overall portfolio would have increased had she invested in foreign stocks in addition to investing in U.S. stocks.
• D)An investment in a majority of the countries would have outperformed what she should have expected to earn on a risk-adjusted basis, using the CAPM as the benchmark.

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Definitions:

Taxed As A Corporation

Refers to a taxation status where a business entity is treated as a corporation for tax purposes, subjecting it to corporate income tax rates and regulations.

Limited Liability Company

An enterprise organization that fuses the limited liability benefit of corporations with the pass-through taxation system characteristic of sole proprietorships or partnerships.

Engages In Fraud

The act of deliberately deceiving another individual or entity to gain an unfair or unlawful advantage.

Limited Liability Company

Is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.