People who hold well-diversified portfolios of stocks have greatly reduced or eliminated
A)firm-specific risk,and so they do not need to worry about their wealth decreasing as a result of recessions.
B)market risk,and so they do not need to worry about their wealth decreasing as a result of recessions.
C)firm-specific risk,but still they have reason to worry about their wealth decreasing as a result of recessions.
D)market risk,but still they have reason to worry about their wealth decreasing as a result of recessions.

Question

Quizplus · Accepted Answer

Diversification reduces firm-specific risk but not market risk, so investors still face risks from economic downturns.

People Who Hold Well-Diversified Portfolios of Stocks Have Greatly Reduced