Which one of the following approaches will increase the level of risk, provided the constituents of a portfolio are not perfectly positively correlated?
A) Make the statistical interdependence between the securities more negative
B) Decreasing the number of securities
C) Reduce diversification
D) Identify high profit investments

Question

Quizplus · Accepted Answer

Diversification helps to reduce the risk of the portfolio by spreading it across different securities. By reducing diversification, the portfolio becomes more concentrated and therefore, increases the level of risk.

Which One of the Following Approaches Will Increase the Level