Aa Aa 9. Effects of portfolio size on portfolio risk 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 25 20 15 10 5 1 0 15 30 45 60 75 90 105 120 135 150 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. As the portfolio size increases, its market risk remains constant. A portfolio of 60 stocks has a total risk of 14%. Diversifiable risk lies below o = 10%. The risk of a portfolio consisting of large-company stocks approaches a limit of 10%. 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 statements about stock's correlation with the market is true? A stock with low stand-alone risk will tend to destabilize the portfolio. A stock with a low correlation with the market is risky. A stock with a high correlation with the market is risky