Multiple Choice
Which of the following statements is CORRECTσ
A) a portfolio that consists of 40 stocks that are not highly correlated with "the market" will probably be less risky than a portfolio of 40 stocks that are highly correlated with the market, assuming the stocks all have the same standard deviations.
B) a two-stock portfolio will always have a lower beta than a one-stock portfolio.
C) if portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
D) a stock with an above-average standard deviation must also have an above-average beta.
E) a two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.
Correct Answer:
Verified
Correct Answer:
Verified
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