Which of the Following Statements Is False

question 74

Multiple Choice

Which of the following statements is false?

• A) Diversification can reduce risk.
• B) Diversification can reduce risk but only by reducing the expected return.
• C) Diversification reduces idiosyncratic risk.
• D) Diversification allocates savings across more than one asset.

---

Definitions:

Third Party

An individual or entity not directly involved in a contract or transaction but may be affected by its outcome.

Agent

An Agent is a person or entity authorized to act on behalf of another, known as the principal, in dealings with third parties.

Judgment

A formal decision or conclusion reached by a court regarding the legal matters before it.

Liability

A legal responsibility or obligation that may result in financial loss.