Ann has a portfolio of 20 average stocks, and Tom has a portfolio of 2 average stocks.Assuming the market is in equilibrium, which of the following statements is CORRECT?
A) The required return on Ann's portfolio will be lower than that on Tom's portfolio because Ann's portfolio will have less total risk.
B) Tom's portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Ann's portfolio, but the required (and expected) returns will be the same on both portfolios.
C) If the two portfolios have the same beta, their required returns will be the same, but Ann's portfolio will have less market risk than Tom's.
D) The expected return on Jane's portfolio must be lower than the expected return on Dick's portfolio because Jane is more diversified.
E) Ann's portfolio will have less diversifiable risk and also less market risk than Tom's portfolio.
Correct Answer:
Verified
Q56: Your friend is considering adding one additional
Q57: Stock A's beta is 1.7 and Stock
Q58: If you plotted the returns of a
Q59: Stock A's beta is 1.7 and Stock
Q60: Consider the following average annual returns for
Q62: If you randomly select stocks and add
Q63: Which of the following statements is CORRECT?
A)
Q64: In a portfolio of three randomly selected
Q65: Which of the following statements is CORRECT?
A)
Q66: Stock A has a beta of 0.8,
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents