If You Randomly Select Stocks and Add Them to Your

question 144

Multiple Choice

If you randomly select stocks and add them to your portfolio, which of the following statements best describes what you should expect?

• A) Adding more such stocks will increase the portfolio's expected rate of return.
• B) Adding more such stocks will reduce the portfolio's beta coefficient and thus its systematic risk.
• C) Adding more such stocks will have no effect on the portfolio's risk.
• D) Adding more such stocks will reduce the portfolio's market risk but not its unsystematic risk.
• E) Adding more such stocks will reduce the portfolio's unsystematic, or diversifiable, risk.

---

Definitions:

Professional School

An institution of higher education focused on teaching students the skills and knowledge needed for specific professional careers, such as law, medicine, business, or engineering.

Factory Jobs

Factory jobs involve work in manufacturing settings, where individuals are employed in the mass production of goods.

Black Freedom

The struggle and movement towards achieving civil rights, equality, and liberty for African Americans, particularly post-emancipation and during the Civil Rights Movement.

Southern Leaders

Refers to influential figures and politicians from the southern United States, particularly those active during the Civil War and Reconstruction eras.