If the Plotting of a Portfolio's Returns Against Returns on the Market

question 40

Multiple Choice

If the plotting of a portfolio's returns against returns on the market index produces a tight pattern, then:

• A)the portfolio appears to be well diversified.
• B)the portfolio has a Beta of 1.0.
• C)the portfolio has very little systematic risk.
• D)the portfolio has a very low market risk premium.

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