Multiple Choice
The principle of diversification tells us that
A) concentrating a portfolio in three companies within the same industry will greatly reduce the overall risk of a portfolio.
B) concentrating a portfolio in two or three large stocks will eliminate all of a portfolio's risk.
C) spreading an investment across many diverse assets will eliminate all of a portfolio's risk.
D) spreading an investment across many diverse assets will lower a portfolio's level of risk.
E) spreading an investment across five diverse companies will not lower a portfolio's level of risk.
Correct Answer:
Verified
Correct Answer:
Verified
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