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:

Suprachiasmatic Nucleus

A region of the brain located in the hypothalamus, responsible for controlling circadian rhythms, including the sleep-wake cycle.

Biological Clock

A mechanism present in organisms that enables them to regulate their bodily rhythms and behaviors in sync with the day-night cycle.

Melatonin

A hormone produced by the pineal gland in the brain, involved in regulating sleep-wake cycles.

Sleeping Pill

A medication used to induce or maintain sleep.