Multiple Choice
Which of the following statements is most correct?
A) If you add enough randomly selected stocks to a portfolio, you can completely eliminate all the market risk from the portfolio.
B) If you form a large portfolio of stocks each with a beta greater than 1.0, this portfolio will have more market risk than a single stock with a beta = 0.8.
C) Company-specific (or unsystematic) risk can be reduced by forming a large portfolio, but normally even highly diversified portfolios are subject to market (or systematic) risk.
D) Answers a, b, and c are correct.
E) Answers b and c are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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