Which of the Following Is/are True

question 21

Multiple Choice

Which of the following is/are true?

• A) Most of the unsystematic risk is removed by the time a portfolio contains 30 stocks.
• B) Two points on the Characteristic Line are the T-bill and the market portfolio.
• C) The greater the total risk of an asset, the greater the expected return.
• D) All securities have a beta between 0 and 1.

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Definitions:

Crowding-out

A phenomenon where increased government spending leads to a reduction in private sector spending and investment due to higher interest rates.

Aggregate Demand

The complete market appetite for all goods and services in an economy, assessed at a defined price level during a particular duration.

Medium of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods between parties.

Federal Funds Rate

The interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight.