Which of the following is most likely correct for a diversified stock portfolio that exhibits a higher standard deviation than the market index?
A)the portfolio contains fairly aggressive stocks
B)the portfolio's stock plot below the security market line
C)the portfolio's Beta is less than 1.0
D)the portfolio contains a significant amount of unique risk

Question

Quizplus · Accepted Answer

A higher standard deviation than the market index suggests that the portfolio contains more volatile stocks than the market, which are often aggressive growth stocks. These stocks may have higher potential returns, but they also come with higher risk.

Which of the Following Is Most Likely Correct for a Diversified