Diversification Can Effectively Reduce Risk

question 13

Multiple Choice

Diversification can effectively reduce risk.Once a portfolio is diversified, the type of risk remaining is:

• A)individual security risk.
• B)riskless security risk.
• C)risk related to the market portfolio.
• D)total standard deviations.
• E)None of the above.

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Definitions:

Mental Activity

Processes of the mind that include thinking, perceiving, remembering, reasoning, and any other form of cerebral operation.

Physical Activity

Any movement of the body that requires energy expenditure, contributing to improving or maintaining physical fitness.

Depressant

Depressant describes substances that reduce arousal and stimulation in the body, often prescribed to relieve anxiety, tension, and sleep disorders.

Mental Activity

Any cognitive operation or process by which an individual becomes aware of or perceives ideas, thoughts, and feelings.