Which of the Following Statements Is CORRECT

question 28

Multiple Choice

Which of the following statements is CORRECT?

• A) the higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio.
• B) it is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock.
• C) once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount.
• D) an investor can eliminate virtually all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks.
• E) an investor can eliminate virtually all market risk if he or she holds a very large and well-diversified portfolio of stocks.

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Definitions:

Net Operating Income

A financial metric representing the amount of profit generated from a company's ordinary operations, excluding expenses from interest and taxes.

Tenant-Days

A metric used in property management to describe the cumulative number of days all tenants occupy a space within a defined period.

Static Budget

A financial plan that does not change over the period it covers, even if actual figures deviate from the planned amounts.

Patient-Visits

A metric in healthcare indicating the number of times patients visit a healthcare provider or facility.