Which of the Following Statements Is Most Correct

question 57

Multiple Choice

Which of the following statements is most correct?

• A)A portfolio with a beta of minus 2 has the same degree of risk to the holder, relative to the market, as a portfolio with a beta of plus 2.However the holder of either portfolio could lower his or her exposure by buying some "normal" stocks.
• B)A stock with a beta of −1.0 has zero systematic (or market) risk.
• C)It is possible for a stock to have a positive beta even in situations where the correlation between the returns on it and those on another stock are negative.
• D)Diversifiable risk, which is measured by beta, can be lowered by adding more stocks to a portfolio.
• E)Statements a and c are both correct.

---

Definitions:

Internal Fertilization

The process in which the male delivers sperm into the body of the female (or close to the entrance of the reproductive tract).

Natural Selection

The method through which creatures more suited to their surroundings are more likely to live and have a higher number of descendants, a crucial driver of evolutionary change.

Buoyancy

The ability of an object to float or rise when submerged in a fluid, due to differences in density.

Skeleton

The internal framework of bone and cartilage in vertebrates (including humans) that supports and protects the body while also aiding in movement.