Diversification Can Effectively Reduce Risk

question 24

Multiple Choice

Diversification can effectively reduce risk. Once a portfolio is diversified the type of risk remaining is:

• A) individual security risk.
• B) riskless security risk.
• C) risk related to the market portfolio.
• D) total standard deviations.

---

Definitions:

Working Hard

The act of putting in a great deal of effort and endurance towards achieving a goal or completing tasks.

Contextual Intelligence

The ability to understand the limits of our knowledge and to adapt that knowledge to an environment different from the one in which it was developed.

Practical Application

The use of theoretical knowledge in a real-world context, demonstrating how concepts or techniques can be employed effectively.

Triarchic Theory

A theory of intelligence proposed by Robert Sternberg, suggesting intelligence is composed of analytical, creative, and practical abilities.