As diversification increases, the standard deviation of a portfolio approaches
A. 0.
B. 1.
C. infinity.
D. the standard deviation of the market portfolio.
E. None of the options are correct.
D. the standard deviation of the market portfolio.
As more and more securities are added to the portfolio, unsystematic risk decreases and most of the remaining risk is systematic, as measured by the variance (or standard deviation) of the market portfolio.
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Which of the following would have the least likelihood of being treated as an extraordinary item?
a. Uninsured loss from earthquake b. Gain or loss on sale of equipment c. Gain or loss arising from enactment of new law d. Uninsured loss from fire
Various laws and contracts govern the rights and obligations of a shareholder. Which of the following is true?
a. Each type of capital stock has its own provisions on voting matters, only. b. Each type of capital stock has its own provisions on sharing in earnings matters, only. c. Each type of capital stock has its own provisions on distributing assets generated by earnings matters, only. d. Each type of capital stock has its own provisions on sharing in assets in case of dissolution of the firm.matters, only. e. Each type of capital stock has its own provisions on such matters as voting, sharing in earnings, distributing assets generated by earnings, and sharing in assets in case of dissolution of the firm. .