If a Share Portfolio Is Well Diversified,then the Portfolio Variance

question 37

Multiple Choice

If a share portfolio is well diversified,then the portfolio variance:

• A)will equal the variance of the most volatile share in the portfolio.
• B)may be less than the variance of the least risky share in the portfolio.
• C)must be equal to or greater than the variance of the least risky share in the portfolio.
• D)will be a weighted average of the variances of the individual securities in the portfolio.
• E)will be an arithmetic average of the variance of the individual securities in the portfolio.

Differentiate between various forms of competition based on the concentration ratio.

Analyze the impact of limit-pricing strategies and entry barriers on market dynamics.

Understand the concept and calculation of the four-firm concentration ratio and its implications for market structure.

Comprehend the Herfindahl index, its calculation, and its significance in determining market power within industries.

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Definitions:

Profit-Maximizing Quantity

The point of production where a firm reaches its maximum profit potential.

Panel

A group of individuals or experts gathered to discuss, analyze, or make decisions on specific subjects.

Intersection

The point at which two lines or paths cross each other.

Economic Loss

The difference between the cost of inputs and the revenues received from outputs, indicating a negative outcome in financial performance.