Multiple Choice
Diversification refers to the _____.
A) reduction of the stand-alone risk of an individual investment, which is measured by its beta coefficient, by combining it with other investments in a portfolio
B) reduction of the stand-alone risk of an individual investment, which is measured by the standard deviation of its returns, by combining it with other investments in a portfolio
C) reduction of the systematic risk of an individual investment, which is measured by its beta coefficient, by combining it with other investments in a portfolio
D) reduction of the systematic risk of an individual investment, which is measured by the standard deviation of its returns, by combining it with other investments in a portfolio
E) reduction of the unsystematic risk of an individual investment, which is measured by its beta coefficient, by combining it with other investments in a portfolio
Correct Answer:
Verified
Correct Answer:
Verified
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