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Which answer is best in explaining what happens to the overall risk in the portfolio if you added 500 securities (rather than 3 securities)? Multiple
Which answer is best in explaining what happens to the overall risk in the portfolio if you added 500 securities (rather than 3 securities)?
Multiple Choice
The covariance in the portfolio goes down and the risk is lower
The correlation increases as you add more securities and the risk is greater
Portfolio risk rises as you add more risky securities
Overall risk diminishes as idiosyncratic risk essentially goes away
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