When Many Assets Are Included in a Portfolio or Index

Multiple Choice

When many assets are included in a portfolio or index the risk of the portfolio or index will be:

A) greater than the risk of the securities because the correlations are greater than 1.
B) equal to the risk of the securities because the correlations are equal to 1.
C) less than the risk of the securities because the correlations are usually less than 1.
D) unaffected by the risk of securities because their correlations are less than 1.