Diversification

question 66

Multiple Choice

Diversification

• A)increases the likely fluctuation in a portfolio's return.Thus,the likely standard deviation of the portfolio's return is higher.
• B)increases the likely fluctuation in a portfolio's return.Thus,the likely standard deviation of the portfolio's return is lower.
• C)reduces the likely fluctuation in a portfolio's return.Thus,the likely standard deviation of the portfolio's return is higher.
• D)reduces the likely fluctuation in a portfolio's return.Thus,the likely standard deviation of the portfolio's return is lower.

---

Definitions:

Normally Distributed

This describes a type of continuous probability distribution for a real-valued random variable where data is symmetrically distributed around the mean.

Gasoline Prices

The cost per unit volume of gasoline, typically influenced by supply and demand factors, taxation, and global oil prices.

Exponential Distribution

Exponential Distribution is a statistical distribution used to model the time between events in a Poisson process, describing phenomena such as the time until a radioactive particle decays.

Expected Value

The anticipated value for a given investment or decision in probabilistic terms, calculated as the weighted average of all possible values.