As We Add More Uncorrelated Stocks to a Portfolio Where

question 101

Multiple Choice

As we add more uncorrelated stocks to a portfolio where the stocks are held in equal weights, the benefit of diversification is most dramatic ________.

• A) after 20 stocks have been added
• B) when there are more than 500 stocks
• C) when there are more than 1,000 stocks
• D) at the outset

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Definitions:

Market Value

The immediate cost set for assets or services to be exchanged in a market setting.

Plant Assets

Long-term tangible assets that are used in the operations of a business and are not intended for sale, such as machinery, buildings, and land.

Tangible Assets

Physical assets that have a form, such as machinery, buildings, and inventory, which can be touched or seen.

Accounting Period

A period of time, such as a month, quarter, or year, over which financial statements are prepared to understand a business's financial position and performance.