Identify each of the following statements as true or false, and explain your ans
ID: 1183044 • Letter: I
Question
Identify each of the following statements as true or false, and explain your answer. Answers without explanations will earn NO CREDIT. a. All investors will prefer a portfolio with expected return 10% and standard deviation 6% to a portfolio with expected return 10% and standard deviation 8%. b. All investors will prefer a portfolio with expected return 12% and standard deviation 6% to a portfolio with expected return 7% and standard deviation 3%. c. Studies show that if you own U.S. stock in one industry, then adding international stocks can provide more effective diversification than adding U.S. stocks in different industries. d. With the smart selection of enough different securities, it is possible to eliminate both systematic and unsystematic risk from a portfolio. e. People should always avoid purchasing stocks with negative betas.Explanation / Answer
dentify each of the following statements as true or false, and explain your answer. Answers without explanations will earn NO CREDIT. a. All investors will prefer a portfolio with expected return 10% and standard deviation 6% to a portfolio with expected return 10% and standard deviation 8%. b. All investors will prefer a portfolio with expected return 12% and standard deviation 6% to a portfolio with expected return 7% and standard deviation 3%. c. Studies show that if you own U.S. stock in one industry, then adding international stocks can provide more effective diversification than adding U.S. stocks in different industries. d. With the smart selection of enough different securities, it is possible to eliminate both systematic and unsystematic risk from a portfolio.
e. People should always avoid purchasing stocks with negative betas.=true