As Randomly Selected Securities Are Combined to Create a Portfolio

question 144

Multiple Choice

As randomly selected securities are combined to create a portfolio, the ________ risk of the portfolio decreases until 10 to 20 securities are included. The portion of the risk eliminated is ________ risk, while that remaining is ________ risk.

• A) diversifiable; nondiversifiable; total
• B) relevant; irrelevant; total
• C) total; diversifiable; nondiversifiable
• D) total; nondiversifiable; diversifiable

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Definitions:

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without any learning needed.

Conditioned Response

A learned reaction or behavior to a previously neutral stimulus that has become associated with a significant stimulus.

Novel Stimulus

A new or unfamiliar stimulus that has not been previously experienced by an organism, often used in experimental research to gauge response or attention.

Stimulant

A substance that increases physiological or nervous activity in the body.