Which of the following statements is CORRECT? a. The higher the correlation betw

Question

Which of the following statements is CORRECT? a. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio. b. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount. c. An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks. d. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well diversified portfolio of stocks. e. It is impossible to have a situation where the market risk of a single stock is less than that of a portfolio that includes the stock.

Explanation / Answer

d. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well diversified portfolio of stocks.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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