The idea behind the portfolio effect is that risk can be reduced by combining securities, but there will be a corresponding reduction in return.

Name: The idea behind the portfolio effect is that risk can be reduced by combining securities, but there will be a corresponding reduction in return.
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Quizplus · Accepted Answer

This is the fundamental concept behind the portfolio effect, which highlights how diversification can lower overall portfolio risk, but may also lead to lower investment returns.

The Idea Behind the Portfolio Effect Is That Risk Can