Portfolio analysis statements


Task: Which one of the following statements is most correct?

a. Market participants are able to eliminate virtually all market risk if they hold a large diversified portfolio of stocks.

b. Market participants are able to eliminate virtually all company-specific risk if they hold a large diversified portfolio of stocks.

c. It is possible to have a situation where the market risk of a single stock is less than that of a well diversified portfolio.

d. Choices a and c are correct.

e. Choices b and c are correct.

Provide which answer is best and why others are not suited.

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Accounting Basics: Portfolio analysis statements
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