The following graph plots the relationship between risk, calculated as the standard deviation of the return of a stock portfolio, and the number of different stocks the portfolio contains for some imaginary stock market.

True or False: Increasing the number of stocks in a portfolio reduces firm$-5$pecific risk.

True

False

Consider two stock portfolios. Portfolio Y consists of four different stocks from firms in different industries. Portfolio X consists of $10$ different stocks, also from firms in different industries. The return on Portfolio $Y$ is likely to be volatile than that of Portfolio $x.$

Suppose a stock analyst recommends buying stock in the following companies:

$\backslash$table$[[$Company$,$Industry$],[$Jackson & Jackson,Pharmaceutical$],[$Fizzer$,$Pharmaceutical$],[$Bazer$,$Pharmaceutical$],[$Walreds$,$Pharmaceutical$],[$Citron$,$Technology$],[$Zahoo$,$Technology$],[$Athena$,$Apparel$]]$

True or False: Increasing the number of stocks in a portfolio reduces firm$-$specific risk.

True

False

Consider two stock portfolios. Portfolio Y consists of four different stocks from firms in different industries. Portfolio X consists of $10$ different stocks, also from firms in different industries. The return on Portfolio $Y$ is likely to be volatile than that of Portfolio $x.$

Suppose a stock analyst recommends buying stock in the following companies:

$\backslash$table$[[$Company$,$Industry$],[$Jackson & Jackson,Pharmaceutical$],[$Fizzer$,$Pharmaceutical$],[$Bazer$,$Pharmaceutical$],[$Walreds$,$Pharmaceutical$],[$Citron$,$Technology$],[$Zahoo$,$Technology$],[$Athena$,$Apparel$],[$Edides$,$Apparel$],[$Generic Motors,Automotive$],[$Horizon$,$Telecommunications$]]$

Each of the following portfolios contains stock picks from four of the listed companies. Which of the portfolios is the least diversified?

Jackson & Jackson, Fizzer, Bazer, Walreds

Horizon, Athena, Generic Motors, Citron

Jackson & Jackson, Walreds, Edides, Athena

Edides, Athena, Citron, Zahoo

The following graph plots the relationship between risk, calculated as the standard deviation of the return of a stock portfolio, and the number of different stocks the portfolio contains for some imaginary stock market.

True or False: Increasing the number of stocks in a portfolio reduces firm$-$specific risk.

True

False

Consider two stock portfolios. Portfolio $Y$ consists of four different stocks from firms in different industries. Portfolio $x$ consists of $10$ different stocks, also from firms in different industries. The return on Portfolio $Y$ is likely to be volatile than that of Portfolio $x.$

Suppose a stock analyst recommends buying stock in the following companies:

$\backslash$table$[[$Company$,$Industry$],[$Jackson & Jackson,Pharmaceutical$],[$Fizzer$,$Pharmaceutical$],[$Bazer$,$Pharmaceutical$],[$Walreds$,$Pharmaceutical$]]$