For a diversified portfolio including a large number of stocks,the:
A) weighted average expected return goes to zero.
B) weighted average of the betas goes to zero.
C) weighted average of the unsystematic risk goes to zero.
D) return of the portfolio goes to zero.
E) return on the portfolio equals the risk-free ratE.

Question

Quizplus · Accepted Answer

In a diversified portfolio, unsystematic risk is minimized or eliminated, so the weighted average of the unsystematic risk approaches zero.

For a Diversified Portfolio Including a Large Number of Stocks,the