Diversification can effectively reduce risk. Once a portfolio is diversified,the type of risk remaining is:
A) individual security risk.
B) riskless security risk.
C) risk related to the market portfolio.
D) total standard deviations.
E) None of these.

Question

Quizplus · Accepted Answer

Diversification reduces unsystematic risk (individual security risk), leaving only systematic risk, which is related to the market portfolio.

Diversification Can Effectively Reduce Risk