Which of the Following Is Most Likely to Be True

question 68

Multiple Choice

Which of the following is most likely to be true for a portfolio of 40 randomly selected stocks?

• A) The riskiness of the portfolio is the same as the riskiness of each stock if it was held in isolation.
• B) The beta of the portfolio is less than the average of the betas of the individual stocks.
• C) The beta of the portfolio is equal to the average of the betas of the individual stocks.
• D) The beta of the portfolio is larger than the average of the betas of the individual stocks.
• E) The riskiness of the portfolio is greater than the riskiness of each of the stocks if each was held in isolation.

---

Definitions:

Bill of Lading

A legal document issued by a carrier to a shipper, detailing the type, quantity, and destination of the goods being transported.

Document of Title

A legal document evidencing the right to control the disposition of goods, such as a bill of lading or warehouse receipt.

Storage of Goods

The act of keeping goods in a space designated for their preservation or until they are sold or distributed.

Warranties

Promises or guarantees made by a seller regarding the quality, condition, or performance of a product.