Other things the same,as the number of stocks in a portfolio rises,
A)risk increases and the standard deviation of the return rises.
B)risk increases and the standard deviation of the return falls.
C)risk decreases and the standard deviation of the return rises.
D)risk decreases and the standard deviation of the return falls.

Question

Quizplus · Accepted Answer

Diversification reduces risk, and as more stocks are added to a portfolio, the unsystematic risk decreases, leading to a lower standard deviation of returns.

Other Things the Same,as the Number of Stocks in a Portfolio