Which of the Following Statements Is CORRECT

question 109

Multiple Choice

Which of the following statements is CORRECT?

• A) A portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.
• B) A two-stock portfolio will always have a lower beta than a one-stock portfolio.
• C) If portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
• D) A stock with an above-average standard deviation must also have an above-average beta.
• E) A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

---

Definitions:

Pessimistic

Characterized by a tendency to see the worst aspect of things or believe that the worst will happen.

Genetic Predispositions

The inherited genetic patterns that influence an organism's traits, behaviors, or vulnerability to certain diseases.

Social And Environmental Conditions

External factors, including society's structures, culture, and the physical environment, that influence individuals' lives and development.

Subliminal Presentation

A method of presenting stimuli below the threshold of conscious awareness, often used in studies to assess the influence on behavior or perception without conscious recognition.