The larger the number of assets in a portfolio and the longer the time period, what can we say about the portfolio beta?
A) It is less stable.
B) It is more stable.
C) It is more consistent.
D) It is less consistent.

Question

Quizplus · Accepted Answer

As the number of assets in a portfolio increases and holding period gets longer, the portfolio beta becomes more stable or less volatile. This is because the impact of individual assets on the portfolio overall decreases as the number of assets increases, and a longer holding period smooths out any short-term fluctuations.

The Larger the Number of Assets in a Portfolio and the Longer