Which of the Following Statements Is CORRECTσ

question 109

Multiple Choice

Which of the following statements is CORRECTσ

• A) a portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.
• B) a two-stock portfolio will always have a lower beta than a one-stock portfolio.
• C) if portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
• D) a stock with an above-average standard deviation must also have an above-average beta.
• E) a two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

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Definitions:

Generating Alternatives

The process of developing multiple options or approaches to solve a problem or make a decision.

Objective Probability

The likelihood of an event occurring based on factual data and statistical analysis rather than personal judgment or opinion.

Death Rates

The ratio of deaths in a particular population, location, or group to the total population, typically expressed per thousand or hundred thousand.

Business Leaders

Individuals recognized for their vision, leadership, and ability to influence the direction and success of their organizations.