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Instructions

Timed Test

This test has a time limit of $2$ hours and $30$ minutes. This test will save and submit automatically when the time expires Warnings appear when half the time, $5$ minutes, $1$ minute, and $30$ seconds remain.

Multiple Attempts Not allowed. This test can only be taken once.

Force Completion This test can be saved and resumed at any point until time has expired. The timer will continue to run if you leave the test.

Your answers are saved automatically.

Remaining Time: $2$ hours, $26$ minutes, $12$ seconds.

Question Completion Status:

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Question $2$

Which of the following must be correct about risk and return?

A portfolio is better diversified if the stocks in the portfolio are less correlated with each other

Underdiversified investors are exposed to greater risk and therefore deserve to earn higher returns compared to diversified investors

Investments with a high return volatility must also have a high beta

As the number of stocks in a portfolio goes up$,$ so does the return volatility of the portfolio

In an efficient market, riskier investments always earn higher returns