Which of the following statements is correct?
A)The dollar return is a more useful measure to compare performance because it more accurately reflects the change in wealth of the investor.
B)A dominant portfolio is one that has the highest risk and highest return within a set of portfolios.
C)By adding stocks to your portfolio, it is possible to effectively eliminate nearly all of the market risk.
D)None of these statements are correct.

Question

Quizplus · Accepted Answer

None of the statements are correct. The dollar return does not necessarily reflect the change in wealth as it does not account for inflation. A dominant portfolio is one that has the highest return for a given level of risk, not necessarily the highest risk. Adding more stocks to a portfolio may diversify risk, but it cannot eliminate all market risk.

Which of the Following Statements Is Correct