As We Add More Uncorrelated Shares to a Portfolio Where

question 12

Multiple Choice

As we add more uncorrelated shares to a portfolio where the shares are held in equal weights, the benefit of diversification is most dramatic:

• A)after 20 shares have been added.
• B)when there are more than 500 shares.
• C)at the outset.
• D)when there are more than 1 000 shares.

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Definitions:

First Grouping Factor

The primary variable used to categorize or group data points in an analysis or experiment.

4 × 3 Factorial Design

An experimental design method that involves two independent variables, where one has 4 levels and the other has 3 levels, leading to 12 different experimental conditions.

Levels

Distinct values or categories of a categorical variable.

Within-Group Estimate

An analysis focusing on the variation or relationships of variables within a single group.