Multiple Choice
Which one of the following statements related to risk is correct?
A) The beta of a portfolio must increase when a stock with a high standard deviation is added to the portfolio.
B) Every portfolio that contains 25 or more securities is free of unsystematic risk.
C) The systematic risk of a portfolio can be effectively lowered by adding T-bills to the portfolio.
D) Adding five additional stocks to a diversified portfolio will lower the portfolio's beta.
E) Stocks that move in tandem with the overall market have zero betas.
Correct Answer:
Verified
Correct Answer:
Verified
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