Explanation

Breadth represents the number of independent active decisions made per period, not just the number of assets in the portfolio.

Option A - Correct: In an arbitrage portfolio using derivatives, breadth can significantly exceed the number of individual assets because:

• Multiple independent decisions can be made about the same underlying asset using different derivatives
• Each derivative position (options, futures, swaps) represents an independent active decision
• Arbitrage strategies often involve simultaneous positions in multiple related securities, creating additional decision opportunities

Option B - Incorrect: A long-only stock portfolio with no systematic risk would typically have breadth equal to or less than the number of individual assets. Without derivatives or other instruments, each stock represents one decision opportunity. The absence of systematic risk doesn't create additional independent decision opportunities.

Key Concept: Breadth measures the number of independent active decisions, not the number of securities. When derivatives are used, the same underlying security can generate multiple independent decision opportunities through different derivative instruments, allowing breadth to exceed the number of individual assets.