Amanda Talks with Several Different Brokers at a Social Gathering

question 442

Multiple Choice

Amanda talks with several different brokers at a social gathering. She hears the following advice from brokers A, B, and C. Which broker, if any, gave her incorrect advice?

• A) Broker A: "There are risks in holding stocks, even in a highly diversified portfolio."
• B) Broker B: "Portfolios with smaller standard deviations have lower risk."
• C) Broker C: "Stocks with greater risks offer lower average returns."
• D) They all gave her correct advice.

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Definitions:

Functional Strategies

Detailed plans laid out for each department or function within an organization, supporting the overall business strategy.

Supply Chain

A network of interconnected businesses involved in the ultimate provision of product and service packages required by end users.

Uncertainty

The lack of predictability or certainty in situations, often affecting decision-making in businesses and markets.

Strategic Fit

The degree to which an organization's strategies align with its internal capabilities and external environment to achieve a competitive advantage.