Which one of the following is most likely correct for a diversified stock portfolio that exhibits a higher standard deviation than the market index?
A) The portfolio contains fairly aggressive stocks.
B) The portfolio plots below the security market line.
C) The portfolio's beta is less than 1.0.
D)The portfolio contains a significant amount of unique risk.

Question

Quizplus · Accepted Answer

A portfolio with a higher standard deviation than the market index typically contains more aggressive stocks, which are expected to have higher volatility. This increased volatility reflects a higher level of risk, which is characteristic of aggressive investments.

Which One of the Following Is Most Likely Correct for a Diversified