Which of the following statements is CORRECT? a. An investor can eliminate virtu
ID: 2672771 • Letter: W
Question
Which of the following statements is CORRECT?a. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks.
b. An investor can eliminate virtually all market risk if he or she holds a very large and well diversified portfolio of stocks.
c. 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.
d. Once a portfolio has about 40 stocks, adding additional stocks will not reduce its risk by even a small amount.
e. The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio.
Explanation / Answer
Which of the following statements is CORRECT?
a. An investor can eliminate virtually all diversifiable risk if he or she holds a very large, well-diversified portfolio of stocks. correct answer
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