Which Statement About Portfolio Diversification Is Correct

question 9

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 above statements are correct.

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