16

Which of the following statements is FALSE? Because diversification improves with the number of stocks held in a portfolio an efficient portfolio should be a large portfolio containing many different stocks. Graphically, the efficient portfolios are those on the northeast edge of the set of possible portfolios, an area which we call the efficient frontier. Utilities tend to be stable and highly regulated, and thus are insensitive to fluctuations in the overall market. Portfolio weights add up to 1 so that they represent the way we have divided our money between the different individual investments in the portfolio