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The Total Risk of a Well-Diversified International Portfolio of Stocks

question 75

Multiple Choice

The total risk of a well-diversified international portfolio of stocks appears to be about what proportion of the risk of an average one-stock portfolio?


Definitions:

Law of Diminishing Marginal Utility

The principle that as a person increases consumption of a product, there is a decline in the marginal utility that person derives from consuming each additional unit.

Ability-To-Pay Principle

The idea that those who have greater income (or wealth) should pay a greater proportion of it as taxes than those who have less income (or wealth).

Marginal Cost

the additional cost incurred to produce one more unit of a good or service.

Marginal Benefit

The added joy or utility one achieves by consuming an additional unit of a product or service.

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