Which of the Following Is Correct Concerning Diversification

question 2

Multiple Choice

Which of the following is correct concerning diversification?

• A)It only reduces firm-specific risk,but most of the reduction comes from increasing the number of stocks in a portfolio to well above 30.
• B)It only reduces firm-specific risk;much of the reduction comes from increasing the number of stocks in a portfolio from 1 to 30.
• C)It only reduces market risk,but most of the reduction comes from increasing the number of stocks in a portfolio to well above 30.
• D)None of the above is correct.

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Definitions:

World Systems Theory

A macro-sociological perspective that analyzes societies in terms of the global economic system, dividing the world into core, periphery, and semi-periphery zones.

Peripheral Countries

Nations that are less developed than the semi-periphery and core countries, often exploited for their resources by more economically dominant nations.

World Poverty

A global issue characterized by the lack of basic resources, services, and opportunities necessary for people to live a healthy and productive life, disproportionately affecting developing countries.

Causes

Factors or conditions that bring about an effect or influence the occurrence of an event, action, or condition.