Which of the Following Statements Is CORRECT

question 3

Multiple Choice

Which of the following statements is CORRECT?

• A) A large portfolio of randomly selected stocks will always have a standard deviation of returns that is less than the standard deviation of a portfolio with fewer stocks,regardless of how the stocks in the smaller portfolio are selected.
• B) Diversifiable risk can be reduced by forming a large portfolio,but normally even highly-diversified portfolios are subject to market (or systematic)risk.
• C) A large portfolio of randomly selected stocks will have a standard deviation of returns that is greater than the standard deviation of a 1-stock portfolio if that one stock has a beta less than 1.0.
• D) A large portfolio of stocks whose betas are greater than 1.0 will have less market risk than a single stock with a beta = 0.8.
• E) If you add enough randomly selected stocks to a portfolio,you can completely eliminate all of the market risk from the portfolio.

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Definitions:

Anxious-ambivalent

A type of attachment style characterized by intense emotional dependence and anxiety about the stability of close relationships.

Attachment Style

The pattern of how individuals form emotional bonds and react to the needs for closeness and space in relationships.

Anxious-ambivalent

A type of attachment style characterized by strong emotional dependence on others combined with anxiety about their availability and responsiveness.

Attachment Style Inventory

A psychological assessment tool used to determine an individual's patterns of attachment in relationships.