An Increase in the Number of Corporations in a Portfolio

question 62

Multiple Choice

An increase in the number of corporations in a portfolio from 110 to 120 reduces

• A)market risk by more than an increase from 1 to 10.
• B)market risk by less than an increase from 1 to 10.
• C)firm-specific risk by more than an increase from 1 to 10.
• D)firm-specific risk by less than an increase from 1 to 10.

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Definitions:

Cultural Factor

An element of the social environment that affects individuals' behaviors, values, and perceptions, and can influence business practices and consumer preferences.

Immunity

The ability of an organism to resist harmful microorganisms from entering it, or the protection granted by law to certain officials or entities from legal action or prosecution.

Public Services

Services provided by the government to its citizens, often free of charge or at a subsidized rate, including education, healthcare, transportation, and law enforcement.

Purchasing Power

The ability of a consumer or a group of consumers to buy goods and services with their income at given prices.