If the plotting of a portfolio's returns against returns on the market index produces a tight pattern, then:
A)The portfolio appears to be well diversified
B)The portfolio has a Beta of 1.0
C)The portfolio has very little systematic risk
D)The portfolio has a very low market risk premium

Question

Quizplus · Accepted Answer

A tight pattern indicates that the portfolio's returns closely follow the market index, suggesting it is well diversified and its unsystematic risk is minimized.

If the Plotting of a Portfolio's Returns Against Returns on the Market