Question
Which of the following statements is CORRECT? a. Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held
Which of the following statements is CORRECT?
a. | Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held in the portfolio, the portfolio can be made to be completely riskless. | |
b. | A portfolio with only a few stocks can have a lower market risk than a portfolio with many stocks. | |
c. | The higher the correlation between the stocks in a portfolio, the lower the risk inherent in the portfolio. | |
d. | A portfolio that consists of all stocks in the market would have a required return that is equal to the riskless rate. | |
e. | An investor can eliminate virtually all market risk if she holds a very large and well diversified portfolio of stocks. |
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