Stock a Moves Up When the Portfolio Moves Up and Down

question 81

Multiple Choice

Stock A moves up when the portfolio moves up and down when the portfolio moves down. Stock B moves down when the portfolio moves up and up when the portfolio moves down. A and B move up and down about the same amount.

• A)A and B are equally risky in a portfolio sense.
• B)A is risky because it adds risk to the portfolio, B is not risky because it reduces the portfolio's risk.
• C)A's risk can be diversified away.
• D)A has some of the personality of B.

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