As Diversification Increases, the Unsystematic Risk of a Portfolio Approaches

question 67

Multiple Choice

As diversification increases, the unsystematic risk of a portfolio approaches

• A) 1.
• B) 0.
• C) infinity.
• D) (n −1) × n.

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Definitions:

Global Competition

The scenario in which companies and businesses from around the world compete with each other to capture market share and achieve higher sales and profits.

Critical Thinking

The ability to objectively analyze and evaluate an issue in order to form a reasoned judgment, characterized by open-mindedness and skepticism.

Objective Knowledge

Information or facts that are not influenced by personal feelings or opinions and can be verified by evidence.

U.S. Department of Labor

A department of the federal government of the United States responsible for occupational safety, wage standards, unemployment insurance benefits, re-employment services, and some economic statistics.