A Well-Diversified Portfolio Is Defined as

question 72

Multiple Choice

A well-diversified portfolio is defined as

• A)one that is diversified over a large enough number of securities that the nonsystematic variance is essentially zero.
• B) one that contains securities from at least three different industry sectors.
• C) a portfolio whose factor beta equals 1.0.
• D) a portfolio that is equally weighted.

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Definitions:

Center

The midpoint or central point of a geometric shape or object.

Vertices

The points where two or more edges meet in a geometric shape or graph.

Center

The midpoint or origin in a coordinate system; also refers to the midpoint of a shape or object in geometry.

Method of Substitution

A technique used to solve systems of equations by solving one equation for one variable and then substituting that expression into the other equation(s).