RISK (Standard deviation of portfolio return) 8 01 True 4 False I 1 10 20 30 NUMBER OF STOCKS IN PORTFOLIO True or False: Increasing the number of stocks in a portfolio reduces market risk. 40 Consider two stock portfolios. Portfolio A consists of 20 different stocks from firms in different industries. Portfolio B consists of four different stocks, turn on Bortfolio A is likely to be yolatile than that of Portfolio B.

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Suppose a stock analyst recommends buying stock in the following companies:
Company
Toyonda
Saalvo
GMW
Honsubishi
Shexxon
Mobron
Airing
Boebus
Goohoo
Pherk
Industry
Automotive
Automotive
Automotive
Automotive
Oil and gas
Oil and gas
Aircraft
Aircraft
Technology
Pharmaceutical
Each of the following portfolios contains four of the stock picks. Which portfolio is the most diversified?
O Toyonda, Saalvo, GMW, Honsubishi
O Boebus, Airing, Shexxon, Mobron.
O Pherk, Toyonda, Goohoo, Shexxon
O Toyonda, Honsubishi, Boebus, Airing
Transcribed Image Text:Suppose a stock analyst recommends buying stock in the following companies: Company Toyonda Saalvo GMW Honsubishi Shexxon Mobron Airing Boebus Goohoo Pherk Industry Automotive Automotive Automotive Automotive Oil and gas Oil and gas Aircraft Aircraft Technology Pharmaceutical Each of the following portfolios contains four of the stock picks. Which portfolio is the most diversified? O Toyonda, Saalvo, GMW, Honsubishi O Boebus, Airing, Shexxon, Mobron. O Pherk, Toyonda, Goohoo, Shexxon O Toyonda, Honsubishi, Boebus, Airing
Hor
+
RISK (Standard deviation of portfolio return)
01
True
30
False
10
20
NUMBER OF STOCKS IN PORTFOLIO
True or False: Increasing the number of stocks in a portfolio reduces market risk.
40
Consider two stock portfolios. Portfolio A consists of 20 different stocks from firms in different industries. Portfolio B consists of four different stocks,
also from firms in different industries. The return on Portfolio A is likely to be
volatile than that of Portfolio B.
Transcribed Image Text:Hor + RISK (Standard deviation of portfolio return) 01 True 30 False 10 20 NUMBER OF STOCKS IN PORTFOLIO True or False: Increasing the number of stocks in a portfolio reduces market risk. 40 Consider two stock portfolios. Portfolio A consists of 20 different stocks from firms in different industries. Portfolio B consists of four different stocks, also from firms in different industries. The return on Portfolio A is likely to be volatile than that of Portfolio B.
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