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:

Statistically Significant

A measure indicating that an observed effect is likely not due to chance alone.

Chance Findings

Unexpected discoveries or results that occur without deliberate search, often during the course of an unrelated study or activity.

Rare Disorder

A health condition that affects a small percentage of the population, often characterized by unique symptoms and challenges in diagnosis and treatment.

Generalizability

The extent to which findings from a study or piece of research can be applied to broader populations or different contexts.