When Stocks with the Same Expected Return Are Combined into a Portfolio

When stocks with the same expected return are combined into a portfolio:

A) the expected return of the portfolio is less than the weighted average expected return of the stocks.
B) the expected return of the portfolio is greater than the weighted average expected return of the stocks.
C) the expected return of the portfolio is equal to the weighted average expected return of the stocks.
D) there is no relationship between the expected return of the portfolio and the expected return of the stocks.
E) None of these.

Correct Answer:

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