As We Increase the Number of Stocks in a Portfolio

question 58

Multiple Choice

As we increase the number of stocks in a portfolio, the standard deviation of returns of the portfolio ________.

• A) increases
• B) remains unchanged
• C) decreases
• D) doubles

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Definitions:

Undisclosed Principal

A situation in a contract where the existence and identity of one party are not revealed to the other party.

Liability

Legal responsibility for one's actions or omissions, which may result in being obligated to offer compensation for harm caused.

Incompetent

Lacking the necessary ability, knowledge, or fitness to perform a legally designated responsibility or action effectively.

Undisclosed Principal

An undisclosed principal is a party in a contractual agreement who remains unknown to the other party or parties involved.