The Incremental Risk to a Portfolio from Adding Another Stock

question 71

Multiple Choice

The incremental risk to a portfolio from adding another stock:

• A)Is always greater than the average portfolio risk
• B)Is always less than the average portfolio risk
• C)Is always positive
• D)Is often positive but can be negative

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Definitions:

Price Level

An average of the current prices of goods and services in an economy, which can fluctuate with changes in production, demand, and inflation.

Laissez-Faire

An economic philosophy of free-market capitalism that opposes government intervention.

Great Depression

A severe worldwide economic downturn that took place during the 1930s.

Nominal GDP

Nominal GDP is the market value of all final goods and services produced within a country in a given period, measured in current prices.