When Stocks with the Same Expected Return Are Combined into a Portfolio

question 18

Multiple Choice

When stocks with the same expected return are combined into a portfolio:

• A) the expected return of the portfolio is less than the average expected return of the stocks.
• B) the expected return of the portfolio is greater than the average expected return of the stocks.
• C) the expected return of the portfolio is equal to the average expected return of the stocks.
• D) there is no relationship between the expected return of the portfolio and the expected return of the stocks.

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