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:

Sustained Exercise

Physical activity that is maintained for an extended period of time to improve health and fitness.

Tempting Foods

Edible items that are highly desirable and appealing, often due to their taste, appearance, or smell, but may not be healthy.

Big Meal

A large serving of food, often consumed during special occasions or gatherings, that typically satisfies and exceeds normal hunger levels.

James-Lange Theory

A theory of emotion that proposes emotions result from the physiological responses to external events, suggesting that we feel emotion because of biological changes caused by stress.