As the Number of Stocks in a Portfolio Rises

question 71

Multiple Choice

As the number of stocks in a portfolio rises,

• A)both firm-specific risks and market risk fall.
• B)firm-specific risks fall;market risk does not.
• C)market risk falls;firm-specific risks do not.
• D)neither firm-specific risks nor market risk falls.

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Definitions:

Sampling Distribution

The probability distribution of a statistic based on a large number of samples or simulations.

Sample Size

The number of observations or participants used in a study or experiment.

Negatively Skewed Distribution

A distribution with a tail that is longer on the left side, indicating that the bulk of the values are concentrated on the right.

Standard Deviation

A measure indicating the spread or discrepancy among quantities in a dataset.