Portfolio a Has but One Security, While Portfolio B Has

question 8

True/False

Portfolio A has but one security, while Portfolio B has 100 securities.Because of diversification effects, we would expect Portfolio B to have the lower risk.However, it is possible for Portfolio A to be less risky.

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Definitions:

Mechanic's Lien

A legal claim against a property by a contractor or repair person who has not been paid for work performed on that property.

Statute

is a formal written law enacted by a legislative body at the local, state, or federal level.

Perfected Secured Interest

A legal condition in which a creditor has established a priority claim on a debtor's collateral, making their claim stronger against third parties.

Unperfected Secured Interest

A security interest in collateral that has not been publicly filed or recorded, potentially making it subordinate to other claims.