Portfolio a Contains Only One Security,while Portfolio B Contains 100

question 81

True/False

Portfolio A contains only one security,while Portfolio B contains 100 securities.Because of diversification effects,we would expect Portfolio B to have the lower relevant risk,but it is possible for Portfolio A to be less risky.

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Definitions:

Limited Liability Partnerships

A business structure that allows partners to have limited liabilities, which means they are not personally liable for the debts of the business.

Portfolio Composition

The breakdown of assets within an investment portfolio, classified by type, sector, risk, or other criteria.

Temporary Misalignments

Short-term discrepancies between the prices or values of related financial instruments or market sectors that are expected to correct over time.

Arbitrage Strategy

An investment strategy aiming to profit from price differences of the same asset across different markets without market risk.