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    Risk of holding securities

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    Which of the following statements is most correct?

    a.It is possible to have a situation where the market risk of a single stock is less than the market risk of a portfolio of stocks.

    b.The market risk premium will increase if, on average, market participants become more risk averse.

    c.If you selected a group of stocks whose return is perfectly positively correlated, then you could end up with a portfolio for which none of the unsymmetric risk is diversified away.

    d.Statements a and b are correct.

    e.All of the statements above are correct.

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    Solution Preview

    Answer: e. All of the statements above are correct.

    a is correct. Beta of a Stock can be less than the beta of ...

    Solution Summary

    Answer to a multiple choice question on risk of holding securities.