Which of the following is most likely to be true for a portfolio of 40 randomly selected stocks?
A. The riskiness of the portfolio is the same as the riskiness of each stock if it was held in isolation.
B. The beta of the portfolio is less than the average of the betas of the individual stocks.
C. The beta of the portfolio is equal to the average of the betas of the individual stocks.
D. The beta of the portfolio is larger than the average of the betas of the individual stocks.
E. The riskiness of the portfolio is greater than the riskiness of each of the stocks if each was held in isolation.
Answer: C
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