A portfolio that includes all the stocks listed on the New York Stock Exchange would
A)have a higher expected return than the expected return on any individual stock.
B)face no idiosyncratic risk, only systematic risk.
C)face no systematic risk, only idiosyncratic risk.
D)face neither systematic nor idiosyncratic risk.

Question

Quizplus · Accepted Answer

A portfolio that includes all the stocks listed on the New York Stock Exchange would face only systematic risk, meaning that the overall performance of the portfolio would be influenced by factors affecting the stock market as a whole, rather than specific risks related to individual stocks. While the expected return of such a portfolio would not necessarily be higher than the expected return of any individual stock, it would be expected to have a more stable performance due to diversification.

A Portfolio That Includes All the Stocks Listed on the New