Give typing answer with explanation and conclusion to all parts 1A.Which of the following is correct?1B.Risk reduction may be achieved by diversification or holding a large number of assets.S&P 500 is a well diversified portfolio that is composed of 500 large stocks.The more assets a portfolio has, the more risk that may be diversified away.The standard deviation of portfolio return is equal to the average of the standard deviations of the assets in the portfolio.Stock A has a standard deviation of return of 10% and expected return of 6%. Stock B has a standard deviation of 20% and anexpected return of 12%, Portfolio AB is composed of 50% of Stock A and 50% of Stock B. Which of the following s correct?The standard deviation of Portfolio AB is greater than 15%.The expected return of Portfolio AB is equal to 99%.The standard deviation of Portfolio AB is less than 15 %.The standard deviation of Portfolio AB is 15%.

1.A Diversified portfolio that consists of many stocks from varieties of companies, from varieties…

achieved by diversification or holding a large nu rsified portfolio that is composed of 500 large st tfolio has, the more risk that may be diversified a n of portfolio return is equal to the average of th

achieved by diversification or holding a large nu rsified portfolio that is composed of 500 large st tfolio has, the more risk that may be diversified a n of portfolio return is equal to the average of th

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 13QTD

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Based on this image, how many stocks does it take to eliminate most of the diversifiable risk?
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