Diversification Works Because Unsystematic Risk Exists

question 326

True/False

Diversification works because unsystematic risk exists.

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Definitions:

Hypergeometric Distribution

A probability distribution used to calculate probabilities for drawing successes without replacement from a finite population.

Binomial Distribution

A probability distribution that summarizes the number of successes in a fixed number of binary experiments.

Poisson Distribution

A probability distribution that expresses the probability of a given number of events occurring in a fixed interval of time or space, assuming that these events occur with a known constant rate and independently of the time since the last event.

Hypergeometric Random Variable

A type of discrete random variable that describes the number of successes in a sequence of draws from a finite population without replacement.