Multiple Choice
Which of the following statements is true?
A) Diversification reduces idiosyncratic risk but not aggregate risk.
B) Diversification reduces aggregate risk but not idiosyncratic risk.
C) Diversification reduces both idiosyncratic risk and aggregate risk but it reduces idiosyncratic risk by more.
D) Diversification requires an investor to hold at least 100 shares in her portfolio to begin to reduce risk significantly.
Correct Answer:
Verified
Correct Answer:
Verified
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