Which of the Following Is Most Likely to Be True

question 137

Multiple Choice

Which of the following is most likely to be true for a portfolio of 40 randomly selected stocksσ

• A) the riskiness of the portfolio is the same as the riskiness of each stock if it was held in isolation.
• B) the beta of the portfolio is less than the average of the betas of the individual stocks.
• C) the beta of the portfolio is equal to the average of the betas of the individual stocks.
• D) the beta of the portfolio is larger than the average of the betas of the individual stocks.
• E) the riskiness of the portfolio is greater than the riskiness of each of the stocks if each was held in isolation.

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Definitions:

Net Asset Value

The per-share value of a mutual fund or exchange-traded fund, calculated by dividing the total value of all securities in the portfolio by the number of shares outstanding.

Net Asset Value

Net Asset Value (NAV) is the per-share value of a mutual fund or ETF, calculated by dividing the total value of all the assets in the portfolio, minus liabilities, by the number of shares outstanding.

Liabilities

Liabilities are financial obligations or debts that a company or an individual owes, which are expected to be paid in the future.

Market Value

Market value is the current value at which an asset, company, or security can be bought or sold in the marketplace, determined by supply and demand dynamics.