Lori,who Currently Owns Stock in Four Companies,has Decided to Expand

question 19

Multiple Choice

Lori,who currently owns stock in four companies,has decided to expand her portfolio by purchasing stock in virtually every company that sells stock.In doing so,Lori will

• A)increase the risk of her portfolio.
• B)decrease some,but not all,of the risk of her portfolio.
• C)decrease all of the risk of her portfolio.
• D)leave the risk of her portfolio unchanged from its present level.

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Definitions:

NPV

A financial analysis method that calculates the difference between the present value of cash inflows and outflows over a period of time, used to assess the worth of investments or projects.

Mutually Exclusive

Events or projects that cannot both occur at the same time, where the selection of one excludes the possibility of the other.

Independent

Not influenced or controlled by others in matters of opinion, conduct; not depending on another's authority.

Return on Assets

A financial ratio that shows the percentage of profit a company earns in relation to its overall resources (total assets).