Diversifying to Reduce Volatility Is a Good Idea Only If

question 38

Multiple Choice

Diversifying to reduce volatility is a good idea only if

• A)shareholders can diversify within their own investment portfolios at low cost.
• B)firms are willing to invest in capital formation.
• C)firms account for social costs of production.
• D)shareholders are willing to pay premium for a company in order to reduce return volatility.

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