Which One of the Following Would Tend to Indicate That

question 114

Multiple Choice

Which one of the following would tend to indicate that a portfolio is being effectively diversified?

• A)An increase in the portfolio rate of return
• B)A decrease in the portfolio standard deviation
• C)An increase in the portfolio beta
• D)An increase in the portfolio standard deviation
• E)A decrease in the portfolio beta

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Definitions:

Unlevered Cost

The cost of an investment that does not include the effects of borrowing or leverage.

Annual Coupon

The annual interest payment made to bondholders, calculated as a percentage of the bond's face value.

Unlevered Cost

refers to the cost of an investment or project that does not include the effect of financial leverage, showing its risk and return profile without debt.

Tax Rate

The portion of one’s earnings or a company's profits that is required to be paid to the government as tax.