Which of the Following Statements Is Correct

question 19

Multiple Choice

Which of the following statements is correct?

• A)Portfolio diversification reduces the variability of the returns on the individual stocks held in a portfolio.
• B)Portfolio A has but one security,while Portfolio B has 100 securities.Because of diversification,we would expect Portfolio B to have lower risk.
• C)If an investor buys enough stocks,he or she can,through diversification,eliminate all market risk.
• D)Diversification can be achieved by purchasing stocks that are perfectly positively correlated.

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