The Extent to Which Risk Is Reduced Through Portfolio Diversification

question 19

True/False

The extent to which risk is reduced through portfolio diversification primarily depends on the expected returns and variances of return in the portfolio.

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Definitions:

Issuer

An entity that releases or circulates a financial instrument, such as a credit card or a bond, making it available to users or investors.

Maximum Penalty

The highest possible punishment or fine that can be imposed for a particular offense or violation under the law.

Willfully Violates

The act of intentionally breaking a law or regulation.

Securities Act Of 1933

The first major federal legislation to regulate the offer and sale of securities. Prior to this act, regulation of securities was chiefly governed by state laws, commonly referred to as blue sky laws. When Congress enacted this act, it left existing state securities laws (“blue sky laws”) in place.