Question: Select the correct statement. When forming a well-diversified large company portfolio like the S&P 500, the standard deviation (of returns) of the portfolio can be

Select the correct statement. When forming a well-diversified large company portfolio

Select the correct statement. When forming a well-diversified large company portfolio like the S&P 500, the standard deviation (of returns) of the portfolio can be reduced to 0. The risk of a stock when it is added to a portfolio is the stock's standard deviation of returns; the risk of a stock when it is your only investment is the stock's beta. Diversification allows you to reduce your risk without lowering your return. O If risk aversion increases in the stock market, stock prices will increase

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