If a stock portfolio is well diversified, then the portfolio variance:

Multiple Choice

• Will equal the variance of the most volatile stock in the portfolio.

• Will be a weighted average of the variances of the individual securities in the portfolio.

• Will be an arithmetic average of the variance of the individual securities in the portfolio.

• May be less than the variance of the least risky stock in the portfolio.

• Must be equal to or greater than the variance of the least risky stock in the portfolio.