Which of the Following Statements Regarding Portfolio Risk and Number

question 23

Multiple Choice

Which of the following statements regarding portfolio risk and number of stocks is generally true?

• A)Adding more stocks increases risk
• B)Adding more stocks decreases risk but does not eliminate it
• C)Adding more stocks has no effect on risk
• D)Adding more stocks increases only systematic risk

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Definitions:

Accounting Records

Documents and ledgers that contain the financial transactions and information of an entity, used to prepare financial statements.

Capital Section

Part of a company’s balance sheet that details the funding provided by owners and investors, including paid-in capital and retained earnings.

Revenue Section

Part of the income statement that details the amounts earned from normal business operations, excluding expenses to calculate gross profit.

Asset Section

Part of a balance sheet that lists a company's assets, including current and non-current (or long-term) assets.