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Business, 17.03.2020 21:08 sanchezp0821

True or False: Increasing the number of stocks in a portfolio reduces market risk.

A) True

B) False

Consider two stock portfolios. Portfolio A consists of four different stocks from firms in different industries. Portfolio B consists of 10 different stocks, also from firms in different industries. The return on Portfolio A is likely to be 1) (MORE or LESS) volatile than that of Portfolio B.

Suppose a stock analyst recommends buying stock in the following companies:

Company Industry
Toyonda Automotive
Saalvo Automotive
GMW Automotive
Honsubishi Automotive
Shexxon Oil and gas
Mobron Oil and gas
Airing Aircraft
Boebus Aircraft
Goohoo Technology
Pherk Pharmaceutica
2) Each of the following portfolios contains four of the stock picks. Which portfolio is the least diversified?

A) Toyonda, Honsubishi, Boebus, Airing

B) Boebus, Airing, Shexxon, Mobron

C) Pherk, Airing, Goohoo, Shexxon

D) Toyonda, Saalvo, GMW, Honsubishi

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Answers: 1

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