Empirically, a comparison of the distribution of historical returns for a large portfolio of randomly selected stocks (say, 50 stocks) with the distribution of historical returns for an individual stock in the portfolio has indicated a curious relationship in that it can be common to find ________.
A) that the standard deviation of return for the individual stocks in the portfolio is considerably smaller than that of the portfolio.
B) that the average return of an individual stock is less than the portfolio return.
C) that the return for all individual stocks in the portfolio is each considerably larger than that of the portfolio itself.
D) that the standard deviation of return for the portfolio is always zero.
Correct Answer:
Verified
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