Which one of the following is most likely correct for a diversified stock portfolio that exhibits a higher standard deviation than the market index?Multiple ChoiceThe portfolio contains a significant amount of specific risk.The portfolio plots below the security market line.The portfolio's beta is less than 1.0.The portfolio contains aggressive stocks with a beta greater than 1.0

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19-12-2022
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Which one of the following is most likely correct for a diversified stock portfolio that exhibits a higher standard deviation than the market index?Multiple ChoiceThe portfolio contains a significant amount of specific risk.The portfolio plots below the security market line.The portfolio's beta is less than 1.0.The portfolio contains aggressive stocks with a beta greater than 1.0

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Tutorconsortium435 Tutorconsortium435 · Answer 1 · 2022-12-22T00:40:04-05:00

For a diversified stock portfolio that has a higher standard deviation than the market index, the assumption that the portfolio contains a significant degree of unique risk is likely accurate.

What exactly does the market index mean?

A market index evaluates a portfolio of securities with certain market characteristics. The index provider uses a distinct approach to calculate and maintain each index. Index algorithms frequently employ market capitalization or price to determine their weight.

What determines the market index?

The index is made up of the stock values of the 30 companies put together, and it is divided by the factor. Stock splits, dividends, or adjustments to the divisor occur when a company is added to or withdrawn from the index

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