Which One of the Following Statements Related to Risk Is

question 10

Multiple Choice

Which one of the following statements related to risk is correct?

• A) The beta of a portfolio must increase when a stock with a high standard deviation is added to the portfolio.
• B) Every portfolio that contains 25 or more securities is free of unsystematic risk.
• C) The systematic risk of a portfolio can be effectively lowered by adding T-bills to the portfolio.
• D) Adding five additional stocks to a diversified portfolio will lower the portfolio's beta.
• E) Stocks that move in tandem with the overall market have zero betas.

---

Definitions:

Wiper Arm

A movable contact in variable resistors or potentiometers that slides across a resistive element to vary resistance.

Wire-Wound

Referring to a type of resistor or inductor where wire is wound around a core to create electrical resistance or inductance.

Variable Resistor

A resistor whose resistance value can be varied between its minimum and maximum values.

Ohmic Value

The resistance value of an electrical component measured in ohms, indicating how much it resists the flow of electric current.