In a Portfolio of Three Randomly Selected Stocks, Which of the Following

question 88

Multiple Choice

In a portfolio of three randomly selected stocks, which of the following could NOT be true; i.e., which statement is false?

• A) The standard deviation of the portfolio is greater than the standard deviation of one or two of the stocks.
• B) The beta of the portfolio is lower than the lowest of the three betas.
• C) The beta of the portfolio is equal to one of the three stock's betas.
• D) The beta of the portfolio is equal to 1.
• E) The standard deviation of the portfolio is less than the standard deviation of each of the stocks if they were held in isolation.

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Definitions:

Levels Of Processing

A theory in cognitive psychology that suggests information can be remembered more or less well, depending on the depth at which it is processed.

Schema

According to Piaget, a hypothetical mental structure that permits the classification and organization of new information.

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A memory disorder where an individual is unable to recall information that was learned or experienced before a specific event or point in time.

Infantile Amnesia

A psychological phenomenon where an individual is unable to recall events from early childhood.