Which of the Following Statements About Diversification Is/are Correct

question 13

Multiple Choice

Which of the following statements about diversification is/are correct?
I.Diversification may be able to reduce the risk of a portfolio to less than the weighted average risk of the assets.
II.Diversification is always prudent and should be expanded to include new, unrelated products whenever possible.

• A)Only statement I is correct
• B)Only statement II is correct
• C)Both statements I and II are correct
• D)Neither statement I nor II is correct

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Definitions:

Well-defined Problem

A well-defined problem is one with clearly specified goals, solution paths, and criteria for evaluating solutions, making it easier to determine when the problem has been resolved.

Towers of Hanoi

A mathematical game or puzzle consisting of three rods and a number of differently sized disks that can slide onto any rod, requiring strategic movement according to specific rules.

Essential Structures

Fundamental components or frameworks that form the basis or core of something, often referring to concepts in both physical and abstract contexts.

Wertheimer

A founding figure in the school of thought known as Gestalt psychology, emphasizing the whole of anything is greater than its parts.