Which of the Following Statements Is CORRECT

question 58

Multiple Choice

Which of the following statements is CORRECT?

• A) A portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.
• B) A two-stock portfolio will always have a lower beta than a one-stock portfolio.
• C) If portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
• D) A stock with an above-average standard deviation must also have an above-average beta.
• E) A two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.

---

Definitions:

Sociological Criticisms

Sociological criticisms refer to analyses or critiques grounded in sociological perspective, often focusing on societal structures, inequalities, behaviors, and practices.

Freud's Model

This refers to Sigmund Freud's theoretical framework for understanding the human psyche, consisting of the id, ego, and superego.

Id

In Freudian psychology, the component of personality that is responsible for our basic desires and drives.

Superego

In psychoanalytic theory, the part of the psyche that acts as a self-critical conscience, reflecting social standards learned from parents and others.