Which of the Following Statements Is Correct

question 3

Multiple Choice

Which of the following statements is correct?

• A)If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.
• B)If you formed a portfolio that consisted of all stocks with betas less than 1.0, which is about half of all stocks, the portfolio would itself have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio, and that portfolio would have less risk than a portfolio that consisted of all stocks in the market.
• C)Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held in the portfolio, the portfolio can be made to be completely riskless.
• D)A portfolio that consists of all stocks in the market would have a required return that is equal to the riskless rate.

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Definitions:

Unilateral Contract

An agreement in which one party makes a promise, but the other party is not required to respond with a promise in return; performance is the only acceptance needed.

Invitation Seeking Offers

An invitation to negotiate or an invitation to the public to make an offer, which is a common practice in contract law, particularly in the context of tenders.

Valid Acceptance

An agreement to the terms of an offer in a manner required by the contract, resulting in a binding contract between the parties.

Communicated

Communication involves the act of sharing, exchanging, or transmitting information, ideas, or feelings between individuals or entities, through various means.