One of the Easiest Methods of Diversifying Away Firm-Specific Risks

question 28

Multiple Choice

One of the easiest methods of diversifying away firm-specific risks is to:

• A) buy only stocks with a beta of 1.0.
• B) build a portfolio with 40 to 55 individual stocks.
• C) purchase the shares of a mutual fund.
• D)purchase stocks that plot above the security market line.

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