Question
What will be the impact on the unsystematic risk of a
portfolio as the number of stocks in a portfolio increases?Solution
When we add more stocks to a portfolio, unsystematic risk will decrease at a decreasing rate. However, the portfolio’s systematic risk can be increased by adding higher-risk stocks or decreased by adding lower-risk stocks.
More Financial Management Questions
Which numbers should be interchanged to make the given equation correct?
105 ÷ 3 – 44 + 5 × 8 = 39
Rearrange the jumbled letters to make a meaningful English word and then select the word which is different from the rest.
Choose the options that show different ways to arrange the letters of the word 'APPLE.'
