Which Statement Is TRUE Regarding Diversification

question 1

Multiple Choice

Which statement is TRUE regarding diversification?

• A) The greater the systematic risk, the greater the return required by the investor.
• B) The greater the diversifiable risk, the greater the return required by the investor.
• C) We are able to remove all systematic risk if enough stocks are added to a portfolio.
• D) Systematic risk is diversifiable.

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Definitions:

PERCEIVE Framework

A conceptual model or tool designed to assist in understanding and analyzing how individuals interpret and make sense of their surroundings or situations.

Eyes

Sensory organs of vision that allow for the perception of light, shapes, colors, and depth, playing a crucial role in human interaction and understanding of the environment.

Nonverbal Cues

Consist of all the ways in which people communicate without words, including gestures, facial expressions, and body language.

Demographics

Statistical data relating to the population and particular groups within it, often used for marketing and planning purposes.