Which Statement About Portfolio Diversification Is Correct

question 37

Multiple Choice

Which statement about portfolio diversification is correct

• A)Proper diversification can 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 the statements is correct.

---

Definitions:

Distinct Occupation

A specialized field or type of work that is clearly different from other professions in terms of skills, training, and responsibilities.

Employer Tools

Resources, software, and technologies provided or utilized by employers to manage, support, and enhance workplace productivity and employee engagement.

Implied Authority

Powers of an agent that are not expressly granted but assumed to be necessary to conduct the principal's business.

Express Authority

Express authority refers to the specific powers given to an agent or entity, explicitly outlined in a contract or agreement.