RISK AND RETURN

Risk and Return

Risk and Return

1.

Ans. B

If all the shares of the stock market, bought in the same proportion, then the risk would be minimized, and the portfolio would move with the market. If stocks traded in equal proportion it totally represents the market, hence minimizing the diversified risk.

2. Ans. D.

Beta shows stocks sensitivity to the market, so when the beta of both the portfolios is same both move in the same direction with equal proportion. Both the portfolios would have the same risk level. When the number of stocks increases in the portfolio, the diversified risk of the ...