A Diversified Portfolio of Securities Is Characterized By

Multiple Choice

A diversified portfolio of securities is characterized by:

A) dissimilar risk-return characteristics of the financial instruments.
B) concentration on a single industry which has the highest growth rate.
C) erratic loss potential due to investment in the latest financial vehicles.
D) unstable earnings for the entire investment horizon.
E) investing on a single security which has the lowest risk and the highest returns.