Which One of the Following Portfolios Might Be Expected to Exhibit

question 10

Multiple Choice

Which one of the following portfolios might be expected to exhibit less unique risk?

• A) Five random stocks; portfolio beta = 0.8
• B) Three random stocks; portfolio beta = 1.2
• C) Ten random stocks; portfolio beta = 1.0
• D)Twelve random stocks; portfolio beta unknown

---

Definitions:

Product Costs

Costs that are directly tied to the production of goods, including raw materials, direct labor, and manufacturing overhead.

Contribution Margin Report

A financial report that shows the difference between a company's sales revenue and variable costs, which contributes towards covering the company's fixed costs and generating profit.

Manufacturing Margin

The difference between the sales revenue of manufactured products and their production costs (excluding indirect costs).

Variable Costing

A costing method that includes only variable production costs (direct labor, direct materials, and variable manufacturing overhead) in product costs.