How Many Randomly Selected Securities Must Be Added to a Portfolio

question 9

Multiple Choice

How many randomly selected securities must be added to a portfolio so that on average almost all of the risk that can be diversified away has been diversified away?

• A)1-3
• B)20 -30
• C)100-150
• D)450-550

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Definitions:

Machining Activity

The process of removing material from a piece of work through methods like cutting, drilling, or milling.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of resources.

Overhead Cost

Expenses associated with the operation of a business that are not directly tied to a specific product or service.

First Stage Allocations

The initial process of allocating overhead costs to various cost pools before they are assigned to individual products or services.