Question
QUESTION 16 If an investor buys at least 50 stocks from different industries, he or she can, through diversification, eliminate all of the company-specific risk
QUESTION 16
-
If an investor buys at least 50 stocks from different industries, he or she can, through diversification, eliminate all of the company-specific risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all market (systematic) risk.
True
False
3.5 points
QUESTION 17
-
Stock A's beta is 0.5 and Stock B's beta is 1.5. Which of the following statements must be true about these securities? (Assume market equilibrium.)
When held in isolation, Stock A has greater risk than Stock B.
Stock B must be a more desirable addition to a portfolio than Stock A.
Stock A must be a more desirable addition to a portfolio than Stock B.
The expected return on Stock A should be greater than that on Stock B.
The expected return on Stock B should be greater than that on Stock A.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started