The Idea That There Is a Limit to the Reduction

question 69

Multiple Choice

The idea that there is a limit to the reduction of portfolio risk due to diversification is

• A) contradicted by both the CAPM and the single-index model.
• B) contradicted by the CAPM.
• C) contradicted by the single-index model.
• D) supported in theory, but not supported empirically.
• E) supported both in theory and by empirical evidence.

---

Definitions:

Visible Finished Product

A tangible outcome that can be seen and evaluated by others, often as the end result of a project or manufacturing process.

Auto Industry

Refers to the global sector of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles.

Job Sharing

Splitting one job between two people.

Full-Time Job

Employment in which the employee works a minimum number of hours defined as full-time by their employer, typically 40 hours per week.