Finra Series-6 Exam - Topic 7 Question 92 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 92
Topic #: 7

[All Series-6 Questions]

By investing in a diversified portfolio, an investor will:

Alower both his risk and his expected return.

Blower his risk without affecting his expected return.

Clower his risk and increase his expected return.

Deliminate all the market risk associated with his investment portfolio.

Show Suggested Answer

Suggested Answer: A

Among other things, the trade confirmation that Anna receives must stipulate the items described in Selections I and III only. The trade confirmation that Anna receives from GetErDone must stipulate the time and date of the transaction, the number of shares sold, and the price at which they were sold. The exchange or ECN on which the transaction was executed is not provided on the confirmation statement. Whether GetErDone acted as a principal or a broker in the transaction does need to be stipulated, but in this instance GetErDone acted as a broker, not a principal. GetErDone did not itself buy the shares from Anna.

by Monroe at Oct 21, 2024, 10:01 AM

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Merilyn

5 months ago

I’m not so sure about that, sounds too good to be true.

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Valentin

6 months ago

Wait, can you really increase returns by diversifying?

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Jani

6 months ago

Totally agree, risk goes down with diversification!

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Shala

6 months ago

I think it can affect expected return too.

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Dorian

6 months ago

Diversifying definitely lowers risk.

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Marisha

6 months ago

I definitely recall that diversification can't eliminate all market risk, so D seems wrong to me.

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Iesha

7 months ago

I feel like option C sounds tempting, but I don't think you can increase expected return just by diversifying.

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Brittni

7 months ago

I think we went over a similar question in class, and the answer was that it lowers risk without changing expected return.

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Burma

7 months ago

I remember studying that diversification helps reduce risk, but I'm not sure if it affects expected return.

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Kimberlie

7 months ago

Wait, I'm confused. Doesn't diversification actually increase expected return in some cases? I'm going to have to re-read that section of the textbook before answering this.

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Stefan

7 months ago

Okay, I've got this. Diversification reduces risk without lowering expected return, so the answer must be B. Gotta love those portfolio theory concepts!

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Gertude

7 months ago

Hmm, I'm a little unsure about this one. I know diversification is supposed to reduce risk, but I can't quite remember how it affects expected return. Let me think this through carefully.

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India

7 months ago

This seems like a pretty straightforward question about diversification. I'm pretty confident I know the answer, but I'll still review my notes just to be sure.

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Dominic

1 year ago

Lowering risk and increasing return? Sounds like the financial equivalent of a perpetual motion machine. Where do I sign up?

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Alesia

11 months ago

C) lower his risk and increase his expected return.

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Angella

11 months ago

That's right! By diversifying, you can lower risk without sacrificing potential return.

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Leota

11 months ago

D) eliminate all the market risk associated with his investment portfolio.

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Ryan

12 months ago

A) lower his risk without affecting his expected return.

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Pa

12 months ago

C) lower his risk and increase his expected return.

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Elmira

12 months ago

A) lower his risk without affecting his expected return.

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Verda

1 year ago

Diversification, the financial equivalent of not putting all your eggs in one basket. Except in this case, the eggs are your hard-earned money. Better choose wisely, folks!

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Moira

1 year ago

Ah, the age-old question of risk and return. If only we could eliminate all market risk and still get great returns. Guess I'll have to settle for the good old diversification strategy.

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Shantell

11 months ago

By diversifying, we can lower our risk without sacrificing returns.

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Louisa

11 months ago

I agree, it's important to have a mix of investments.

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Chi

1 year ago

Diversification is key to managing risk.

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Polly

1 year ago

Hmm, this is tricky. I'm pretty sure option B is the correct answer, but I can see how the other options might sound tempting. Gotta love those financial conundrums!

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Rosenda

1 year ago

I know investing in a diversified portfolio is important, but the idea of lowering risk and increasing expected return seems too good to be true. C'mon, there's no free lunch in the investment world!

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