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You Have the Choice of Introducing Either Stock X or Stock

question 14

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?


Definitions:

Interest Rate

The percentage charged on a loan or paid on savings or investments, typically expressed as an annual percentage of the principal.

Final Payment

The last payment made on a loan, debt, or financing agreement, completing the repayment obligation.

Interest Rate

The percentage charged on a loan or paid on deposits over a specific period.

Economic Value

The calculation of the advantage that a product or service offers to an economic participant.

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