Which Statement About Portfolio Diversification Is Correct

question 7

Multiple Choice

Which statement about portfolio diversification is correct?

• A) Proper diversification can reduce or eliminate systematic risk.
• B) The risk-reducing benefits of diversification do not occur meaningfully until at least 50-60 individual securities have been purchased.
• C) Because diversification reduces a portfolio's total risk,it necessarily reduces the portfolio's expected return.
• D) Typically,as more securities are added to a portfolio,total risk would be expected to decrease at a decreasing rate.
• E) None of these statements are correct.

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