An Increase in the Number of Corporations in a Portfolio

question 62

Multiple Choice

An increase in the number of corporations in a portfolio from 110 to 120 reduces

• A)market risk by more than an increase from 1 to 10.
• B)market risk by less than an increase from 1 to 10.
• C)firm-specific risk by more than an increase from 1 to 10.
• D)firm-specific risk by less than an increase from 1 to 10.

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Definitions:

Ruling Passion

A dominant interest or driving force that significantly influences a person's decisions and actions throughout their life.

Common Traits

Traits possessed in some degree by all persons.

Culture

The shared values, traditions, norms, customs, arts, history, folklore, and institutions of a group of people that are passed through generations.

Freudian Slips

Unintentional errors in speech or memory believed to reveal subconscious thoughts or desires, according to Freudian psychoanalytic theory.