Diversification Refers to the _____

question 57

Multiple Choice

Diversification refers to the _____. 

• A)reduction of the stand-alone risk of an individual investment, which is measured by its beta coefficient, by combining it with other investments in a portfolio
• B)reduction of the stand-alone risk of an individual investment, which is measured by the standard deviation of its returns, by combining it with other investments in a portfolio
• C)reduction of the systematic risk of an individual investment, which is measured by its beta coefficient, by combining it with other investments in a portfolio
• D)reduction of the systematic risk of an individual investment, which is measured by the standard deviation of its returns, by combining it with other investments in a portfolio
• E)reduction of the unsystematic risk of an individual investment, which is measured by its beta coefficient, by combining it with other investments in a portfolio

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Definitions:

Hierarchy

A system or organization in which people or groups are ranked one above the other according to status or authority.

Organizational Subsystem

A division or unit within an organization that has its specific role and functions contributing to the overall objectives.

Boundary-Spanning

Activities and practices by individuals or units within an organization that interact with and adapt to external environments and stakeholders.

Managerial

Relating to the duties, skills, and tasks of managers involved in planning, organizing, directing, and managing within a business entity.