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 that 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 in a single security that has the lowest risk and the highest returns.