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:

Spongy Layer

Part of a leaf's mesophyll, characterized by loosely arranged cells with air spaces, facilitating gas exchange.

Shock Absorber

A device in vehicles and machinery designed to dampen and absorb shock impulses, providing a smoother ride or operation.

Gas Exchange

The process by which oxygen is taken into the body and an exchange of carbon dioxide is expelled, primarily occurring in the lungs.

Leaf Primordia

Young, undeveloped leaves that are in the earliest stages of growth, found in the buds of plants.