Which of the following is incorrect?
A)It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification.
B)Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio.
C)The optimal portfolio is the one with the lowest amount of risk.
D)All of these statements are correct.

Question

Quizplus · Accepted Answer

Combining assets that move in the exact same fashion does not provide diversification benefits, as diversification relies on combining assets with different movements to reduce risk.

Which of the Following Is Incorrect