Which of the Following Statements Is Most Correct

question 56

Multiple Choice

Which of the following statements is most correct?

• A) A portfolio with a beta of minus 2 has the same degree of risk to its holder,relative to the market,as a portfolio with a beta of plus 2.However,the holder of either portfolio could lower his or her risk exposure by buying some "normal" stocks.
• B) A stock with a beta of −1.0 has zero systematic (or market)risk.
• C) It is possible for a stock to have a positive beta even in situations where the correlation between the returns on it and those on another stock are negative.
• D) Diversifiable risk,which is measured by beta,can be lowered by adding more stocks to a portfolio.
• E) Statements a and c are both correct.

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Definitions:

Spatial

Refers to anything related to, occupying, or having the character of space.

Chronological

Relating to the arrangement of events or information in order of their occurrence in time.

Causal Relationship

A connection between two events or variables where one directly affects or causes changes in the other.

Purpose Statement

A declaration that outlines the objectives or goals of a project, company, or individual.