Other things the same,as the stocks of a greater number of corporations are held in a portfolio,
A)risk increases at an increasing rate.
B)risk increases at a decreasing rate.
C)risk decreases at an increasing rate.
D)risk decreases at a decreasing rate.

Question

Quizplus · Accepted Answer

Diversification reduces risk, but the marginal benefit of adding more stocks decreases as more are added, leading to a decreasing rate of risk reduction.

Other Things the Same,as the Stocks of a Greater Number