Which of the following statements is correct?
a. if portfolios are formed by randomly select...
Which of the following statements is correct?
a. if portfolios are formed by randomly selecting stocks, a 10-stock portfolio will always have a lower beta than a one-stock portfolio.
b. a two-stock portfolio will always have a lower standard deviation than a one-stock portfolio.
c. a two-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 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.
Answers: 1
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