Multiple Choice
Which of the following statements is (are) true regarding time diversification?
I. The standard deviation of the average annual rate of return over several years will be smaller than the 1-year standard deviation.
II. For a longer time horizon, uncertainty compounds over a greater number of years.
III. Time diversification does not reduce risk.
A) I only
B) II only
C) II and III only
D) I, II, and III
Correct Answer:
Verified
Correct Answer:
Verified
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