If the plotting of a portfolio's returns against returns on the market index produces a tight pattern,then:
A) the portfolio appears to be well diversified.
B) the portfolio has a beta of 0.
C) the portfolio has very little systematic risk.
D) the portfolio has a very low market risk premium.

Question

Quizplus · Accepted Answer

A tight pattern indicates that the portfolio's returns closely follow the market index, suggesting that it is well diversified and primarily exposed to systematic risk.

If the Plotting of a Portfolio's Returns Against Returns on the Market