The total risk of a well-diversified international portfolio of stocks appears to be about what proportion of the risk of an average one-stock portfolio?
A)one-third
B)one-half
C)two-thirds
D)three-fourths

Question

Quizplus · Accepted Answer

A well-diversified international portfolio significantly reduces unsystematic risk, which is the risk specific to individual stocks. As a result, the total risk of such a portfolio is typically much lower than that of an average one-stock portfolio, often around one-third of the risk.

The Total Risk of a Well-Diversified International Portfolio of Stocks