Which of the Following Is Most Likely to Occur as You

question 74

Multiple Choice

Which of the following is most likely to occur as you add randomly selected stocks to your portfolio, which currently consists of 3 average stocksσ

• A) the expected return of your portfolio is likely to decline.
• B) the diversifiable risk will remain the same, but the market risk will likely decline.
• C) both the diversifiable risk and the market risk of your portfolio are likely to decline.
• D) the total risk of your portfolio should decline, and as a result, the expected rate of return on the portfolio should also decline.
• E) the diversifiable risk of your portfolio will likely decline, but the expected market risk should not change.

---

Definitions:

Percentage

A fraction or ratio expressed as part of one hundred, used to compare quantities or to indicate a portion of a whole.

Debt To Total Assets Ratio

A financial metric indicating what proportion of a company's total assets are financed through debt, used to assess financial leverage.

Creditor's Point Of View

A perspective focusing on the safety, return, and timeliness of payments related to the amounts lent or credits extended.

Obligations

Liabilities or commitments a company or individual has to pay back money or perform specific actions in the future.