Which one 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 aggressive stocks with a beta greater than 1.0
B) The portfolio plots below the security market line.
C) The portfolio's beta is less than 1.0.
D) The portfolio contains a significant amount of specific risk.

Question

Quizplus · Accepted Answer

A diversified stock portfolio with a higher standard deviation than the market index likely contains aggressive stocks with a beta greater than 1.0, indicating higher volatility and risk compared to the market.

Which One of the Following Is Most Likely Correct for a Diversified