Which of the Following Is Most Likely Correct for a Diversified

question 71

Multiple Choice

Which of the following is most likely correct for a diversified stock portfolio that exhibits a higher standard deviation than the market index?

• A)The portfolio contains fairly aggressive stocks
• B)The portfolio's stock plot below the security market line
• C)The portfolio's Beta is less than 1.0
• D)The portfolio contains a significant amount of unique risk

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Definitions:

Subduction Zone

A region of the Earth's crust where one tectonic plate moves under another, leading to volcanic activity and earthquakes.

Arc

A continuous portion of a circle or other curved line, or in geological terms, a curved series of volcanic islands that form above a subducting plate.

Tectonic Terrane

A fault-bounded body of rock that has a different geologic history than adjacent regions.

Horst and Graben

Geological structures where a horst is a raised block of the earth's crust bordered by faults, and a graben is a lowered block of the earth's crust bordered by parallel faults.