The Main Reason for Diversifying a Portfolio Is

Multiple Choice

The main reason for diversifying a portfolio is

A) to take advantage of the fact that returns on assets are imperfectly correlated.
B) to take advantage of the favorable tax treatments diversified portfolios receive from the federal government.
C) that diversified portfolios have greater liquidity than undiversified portfolios.
D) that diversified portfolios have lower information costs than undiversified portfolios.