The Variance of a Portfolio of Assets

question 85

Multiple Choice

The variance of a portfolio of assets:

• A) decreases as the number of assets increases.
• B) increases as the number of assets increase.
• C) approaches 0 as the number of assets decreases.
• D) approaches 1 as the number of assets increases.

---

Definitions:

Federal Reserve

The central banking system of the United States, responsible for monetary policy, regulation of banks, and stability of the financial system.

Interest Rates

The amount charged, expressed as a percentage of principal, by lenders to borrowers for the use of money as a loan, influencing economic activity.

Unemployment Insurance

A government program that provides temporary financial assistance to unemployed workers who have lost their jobs through no fault of their own.

Contributory Program

A social welfare system that requires individuals to contribute through taxes or payments in order to be eligible for benefits or services.