The Principle of Diversification Tells Us That

Multiple Choice

The principle of diversification tells us that:

A) Concentrating an investment in two or three large stocks will eliminate all of your risk.
B) Concentrating an investment in two large stocks will cut your risk exactly in half.
C) Spreading an investment across many diverse assets cannot (in an efficient market) eliminate any risk.
D) Spreading an investment across many diverse assets will eliminate all of the risk.
E) Spreading an investment across many diverse assets will eliminate some of the risk.