Which of the Following Statements Is CORRECTσ

question 39

Multiple Choice

Which of the following statements is CORRECTσ

• A) diversifiable risk can be reduced by forming a large portfolio, but normally even highly-diversified portfolios are subject to market (or systematic) risk.
• B) a large portfolio of randomly selected stocks will have a standard deviation of returns that is greater than the standard deviation of a 1-stock portfolio if that one stock has a beta less than 1.0.
• C) a large portfolio of stocks whose betas are greater than 1.0 will have less market risk than a single stock with a beta = 0.8.
• D) if you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.
• E) a large portfolio of randomly selected stocks will always have a standard deviation of returns that is less than the standard deviation of a portfolio with fewer stocks, regardless of how the stocks in the smaller portfolio are selected.

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Definitions:

Psychological Processes

Mental activities including thinking, perceiving, feeling, and remembering, that underlie human behavior.

Biological Functioning

The processes and activities carried out by living organisms, including humans, which maintain life and contribute to growth, reproduction, and survival.

Repetitive Transcranial Magnetic Stimulation

A noninvasive procedure using magnetic fields to stimulate nerve cells in the brain to improve symptoms of depression.

Deep Brain Stimulation

Procedure to treat depression in which electrodes are surgically implanted in specific areas of the brain and connected to a pulse generator that is placed under the skin and stimulates these brain areas.