Which of the Following Describes What Will Occur as You

question 86

Multiple Choice

Which of the following describes what will occur as you randomly add stocks to your portfolio?

• A) The nondiversifiable risk will decrease.
• B) Both the diversifiable and nondiversifiable risk will decrease.
• C) The portfolio return will increase.
• D) The diversifiable risk will decrease.

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Definitions:

Liability

A financial obligation or debt owed by an individual or company to another entity, requiring the transfer of resources at a future date.

Credits

An accounting entry that increases liabilities or equity or decreases assets on a company's balance sheet.

Debits

Debits are accounting entries that increase asset or expense accounts, or decrease liability, equity, or revenue accounts, typically noted on the left side of accounting ledgers.

Dividends Account

An account used to record the payment of dividends, which are distributions of a corporation's earnings to its shareholders.