In a portfolio of three different stocks, which of the following could NOT be tr

Question

In a portfolio of three different stocks, which of the following could NOT be true? a. The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation.
b. The riskiness of the portfolio is greater than the riskiness of one or two of the stocks.
c. The beta of the portfolio is less than the betas of each of the individual stocks.
d. The beta of the portfolio is greater than the beta of one or two of the individual stocks In a portfolio of three different stocks, which of the following could NOT be true? a. The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation.
b. The riskiness of the portfolio is greater than the riskiness of one or two of the stocks.
c. The beta of the portfolio is less than the betas of each of the individual stocks.
d. The beta of the portfolio is greater than the beta of one or two of the individual stocks

Explanation / Answer

Answer:

In a portfolio of three different stocks, following could NOT be true:

c. The beta of the portfolio is less than the betas of each of the individual stocks.

Because portfolio beta is calculated as averge of all assets beta in the potfolio and hence the portfolio beta can not be less than the betas of each of the individual stocks.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.