Which of the Following Is Correct Concerning Diversification

question 2

Multiple Choice

Which of the following is correct concerning diversification?

• A)It only reduces firm-specific risk,but most of the reduction comes from increasing the number of stocks in a portfolio to well above 30.
• B)It only reduces firm-specific risk;much of the reduction comes from increasing the number of stocks in a portfolio from 1 to 30.
• C)It only reduces market risk,but most of the reduction comes from increasing the number of stocks in a portfolio to well above 30.
• D)None of the above is correct.

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Definitions:

Transparency

The quality of being open and honest, providing accessible and clear information to stakeholders.

Authenticity

The quality of being genuine, real, and true, especially in relation to self-expression and the creation of trust.

Crisis Communication

The practice of protecting and defending an individual, company, or organization facing a public challenge to its reputation.

Network Diffusion

The process through which information, ideas, or trends spread through a network, such as social networks, affecting its participants.