Which of the following is correct?
A) Investors can reduce the risk in their portfolio by investing in international stocks since they tend to have low correlation with our own stock market.
B) Combining both stocks and bonds will likely reduce risk in a portfolio because the two assets have low correlation.
C) Your optimal portfolio is an efficient portfolio with your desired risk level.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

All the statements are correct. A) International stocks can offer diversification benefits due to their low correlation with domestic stocks. B) Stocks and bonds typically have low correlation, which can reduce overall portfolio risk. C) An optimal portfolio is indeed an efficient one that matches an investor's risk preference.

Which of the Following Is Correct