Which of the Following Statements Is CORRECT

question 109

Multiple Choice

Which of the following statements is CORRECT?

• A) A portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.
• B) A two-stock portfolio will always have a lower beta than a one-stock portfolio.
• C) If portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
• D) A stock with an above-average standard deviation must also have an above-average beta.
• E) A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

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Definitions:

Central U.S.

The region located in the center of the United States, characterized by its diverse geography ranging from the Great Plains to the Great Lakes.

Rock Slide

A type of mass wasting event that involves the rapid sliding down of rock masses along slopes.

Sliding Block

A model concept in geology and physics representing the movement of a rigid block over a surface due to applied forces.

Discontinuity

A break or difference in the physical properties within the Earth's interior, often reflecting changes in composition or phase.