Which of the Following Statements Is False

question 72

Multiple Choice

Which of the following statements is false?

• A) Because diversification improves with the number of stocks held in a portfolio, an efficient portfolio should be a large portfolio containing many different stocks.
• B) The beta of a security is the sensitivity of the security's return to the return of the overall market.
• C) An efficient portfolio cannot be diversified further; that is, there is no way to reduce the risk of the portfolio without lowering its expected return.
• D) We call a portfolio that contains only unsystematic risk an efficient portfolio.

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