Which One of the Following Is Most Likely Correct for a Diversified

question 78

Multiple Choice

Which one of the following is most likely correct for a diversified stock portfolio that exhibits a higher standard deviation than the market index?

• A) The portfolio contains aggressive stocks with a beta greater than 1.0
• B) The portfolio plots below the security market line.
• C) The portfolio's beta is less than 1.0.
• D) The portfolio contains a significant amount of specific risk.

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Definitions:

Precipitation

Any form of water, liquid or solid, that falls from the atmosphere and reaches the ground.

Biotic Factor

A living component of an ecosystem, such as plants, animals, and microorganisms, that affects and interacts with other organisms in their environment.

Bacteria

Microscopic single-celled organisms that inhabit virtually all environments on Earth, including soil, water, and living organisms, playing critical roles in various ecosystems.

Aquatic Life Zone

Areas in water bodies, such as lakes, rivers, and oceans, that support life, including various plants, animals, and microorganisms.