Empirically, a Comparison of the Distribution of Historical Returns for a Large

question 43

Multiple Choice

Empirically, a comparison of the distribution of historical returns for a large portfolio of randomly selected stocks (say, 50 stocks) with the distribution of historical returns for an individual stock in the portfolio has indicated a curious relationship in that it can be common to find ________.

• A) that the standard deviation of return for the individual stocks in the portfolio is considerably smaller than that of the portfolio.
• B) that the average return of an individual stock is less than the portfolio return.
• C) that the return for all individual stocks in the portfolio is each considerably larger than that of the portfolio itself.
• D) that the standard deviation of return for the portfolio is always zero.

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Fraudulent attempts to obtain sensitive information by disguising oneself as a trustworthy entity in electronic communications.

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