(20,60),(80,42),(160,33) horizontal: (200,30)

The following graph plots portfolio risk against the size of the portfolio as measured by the number of stocks in the portfolio. (Hint: Hover the mouse over the graph to read the coordinates.) PORTFOLIO RISK 75 60 45 30 15 20 40 60 80 100 120 140 160 180 200 NUMBER OF STOCKS IN THE PORTFOLIO Based on the data presented in the previous graph, which of the following statements are true? Check all that apply. O A portfolio of 80 stocks has a total risk of 42%. Diversifiable risk lies below a = 30%. As the portfolio size increases, its market risk remains constant. The risk of a portfolio consisting of large-company stocks approaches a limit of 30%. All stocks are equally risky, and adding them to a portfolio will increase the portfolio's risk. The benchmark for a well-diversified stock portfolio is the market portfolio, which is a portfolio containing all stocks. The relevant risk of an individual stock is measured by its beta coefficient, which is defined under the Capital Asset Pricing Model (CAPM) as the amount of risk that the stock contributes to the well-diversified portfolio. Based on your understanding of the CAPM and beta, answer the following question: Which of the following is the correct definition of beta coefficient of stock i, bi? The Standard Deviation of Stock i's Return / The Standard Deviation of the Market Return (The Standard Deviation of Stock i's Return / The Standard Deviation of the Market Return) x The Correlation Between Stock i's Return and the Market Return O The Standard Deviation of Stock i's Return x The Correlation Between Stock i's Return and the Market Return