As We Add More Uncorrelated Stocks to a Portfolio Where

question 101

Multiple Choice

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

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

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Definitions:

Fair Bargain

A deal or agreement that is considered equitable and satisfactory to all parties involved.

Full Satisfaction

The complete fulfillment of an obligation or payment in a manner that fully satisfies the terms agreed upon.

Debt

An obligation owed by one party, the borrower, to a second party, the lender; typically involving borrowed money that is expected to be paid back with interest.

Exchange Of Consideration

The act in a contract where something of value is traded between parties, forming the basis for mutual obligation.