A financial planner is examining the portfolios held by several of her clients. Which of the foilowing port allios is likely to have the smallest standard deviation? O A portfrolio containing only Microsoft stock O A portfolio containing Microsoft, Apple, and Google stock O A portfolio consisting of about three randomly selected stocks from different sectors Portfolio managers pick stocks for their clients' portfolios based on the investment objective of the portfolio and several other factors. One key consideration is each stock's contribution to portfolio risk and its statistical relationship with the portfolia's other stocks. Based on your understanding of portfolio risk, identify whether each statement is true or faise. Statement True False o A portfolio's risk is likely to be smaller than the average of all stocks, standard deviations, because diversification lowers the portfolio's risk. Because of the effects of diversfication, the portfolio's risk is likely to be more than the average of all stocks' standard deviations. lo risk will increase if more stocks that are negatively crelated with other stocks are O added to the portfolio. The unsystematic risk component of the total portfolio risk can be reduced by adding negatively correlated stocks to the portfolio