As the Number of Securities in a Portfolio Is Increased

question 6

Multiple Choice

As the number of securities in a portfolio is increased, what happens to the average portfolio standard deviation?

• A) It increases at an increasing rate.
• B) It increases at a decreasing rate.
• C) It decreases at an increasing rate.
• D) It decreases at a decreasing rate.
• E) It first decreases, then starts to increase as more securities are added.

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Definitions:

Fear

The central nervous system’s physiological and emotional response to a serious threat to one’s well-being.

Behavioral-Evolutionary

An approach in psychology that combines principles of behavioral analysis and evolutionary biology to understand how behavior is influenced by genetic and environmental factors.

Predisposition

A natural inclination or tendency to develop a particular condition or disease.

Environmental

Environmental pertains to anything related to the natural or built surroundings that affect organisms.