Multiple Choice
Which of the following statements is CORRECTσ
A) the higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio.
B) an investor can eliminate almost all risk if he or she holds a very large and well diversified portfolio of stocks.
C) once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount.
D) an investor can eliminate almost all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks.
E) an investor can eliminate almost all market risk if he or she holds a very large and well diversified portfolio of stocks.
Correct Answer:
Verified
Correct Answer:
Verified
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