You Have the Choice of Introducing Either Stock X or Stock

question 72

Multiple Choice

You have the choice of introducing either Stock X or Stock Y into your fully diversified portfolio.Both stocks have 5 units of systematic risk while Stock X has 6 units of unsystematic risk and Stock Y has 8 units of unsystematic risk.Which stock offers the greatest opportunity from diversification?

• A) Stock X
• B) Stock Y
• C) both stock offer the same opportunity
• D) there is not enough information to determine the answer

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Definitions:

Schema

Cognitive frameworks or concepts that help organize and interpret information, based on experience, and thereby influence cognition and perception.

Insecure Attachment

A condition resulting from the lack of a secure bond between a child and their caregiver, leading to difficulties in relationships and emotional regulation.

Existing Schemas

Established sets of mental frameworks or patterns that individuals use to organize and interpret information based on their past experiences and knowledge.

Assimilation

The process by which individuals or groups of differing cultural backgrounds are absorbed into the dominant culture of a society.