Which of the Following Statements Is Most Correct

question 104

Multiple Choice

Which of the following statements is most correct?

• A) Portfolio diversification reduces the variability of the returns on the individual stocks held in the portfolio.
• B) Portfolio A has but one security,while Portfolio B has 100 securities.Because of diversification,we would expect Portfolio B to have the lower relevant risk,but it is possible for Portfolio A to be less risky.
• C) If an investor buys enough stocks,he or she can,through diversification,eliminate all of the nonmarket (or company-specific)risk inherent in owning stocks.Indeed,if the portfolio contained some of all publicly traded stocks,it would be riskless.
• D) Statements a,b,and c are all true.
• E) Statements a,b,and c are all false.

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Definitions:

Hypodermis

Innermost layer of skin composed of fat.

Osteoporosis

A bone disease characterized by decreased bone mass and density, leading to an increased risk of fractures.

Metabolic Function

The biological processes that sustain an organism's life, including energy production, growth, and elimination of waste.

Wrinkling

The formation of ridges, folds, or creases in the skin, often as a result of aging or prolonged exposure to water.