As We Add More Uncorrelated Stocks to a Portfolio Where

question 100

Multiple Choice

As we add more uncorrelated stocks to a portfolio where the stocks are held in equal weights,the benefit of diversification is most dramatic:

• A)after 20 stocks have been added.
• B)when there are more than 500 stocks.
• C)when there are more than 1000 stocks.
• D)at the outset.
• E)when there are more than 100 stocks.

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Definitions:

Laspeyres Price Index

A measure of the change in the overall price of a specific set of goods and services over time, using the quantities of the goods and services purchased in the base period.

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.

Prices

The total monetary value expected, called for, or delivered in payment for an object.

Laspeyres Price Index

A price index used to measure the change in the cost of purchasing a fixed basket of goods and services over time, based on the quantities purchased in the base period.