Which of the Following Statements Is Most Correct

question 13

Multiple Choice

Which of the following statements is most correct?

• A) The expected return on a portfolio of financial assets is equal to the summation of the products of the expected returns of the individual assets multiplied by the probability of each return being realized.
• B) When adding new securities to a portfolio,the higher or more positive the degree of correlation between the new securities and those already in the portfolio,the greater the benefits of the additional portfolio diversification.
• C) In portfolio analysis,we rarely use ex post (historical)returns and standard deviations,because we are interested in ex ante (future)data.
• D) Portfolio diversification reduces the variability of returns on each security held in the portfolio.
• E) All of the above statements are false.

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Definitions:

Comparative Negligence

A legal doctrine that reduces the amount of damages a plaintiff can recover in a negligence-based claim, based upon the degree to which the plaintiff's own negligence contributed to cause the injury.

Implied Assumption

An unstated understanding or presumption that underlies an agreement or contract, accepted as a term by the parties involved.

Risk Doctrine

A principle in law that assigns liability based on the foreseeable risk created by actions or negligence, particularly in situations where harm could have been prevented.

Action Of Negligence

A legal claim made against someone for harm caused by their failure to act as a reasonable person would under similar circumstances.