The cost associated with diversification is:
A) a reduction in beta.
B) a reduction in the risk premium.
C) a reduction in the reward-to-risk ratio.
D) a reduction in the expected return.
E) essentially zero.

Question

Quizplus · Accepted Answer

Diversification reduces unsystematic risk without a cost, as it involves spreading investments across various assets, which doesn't inherently reduce expected returns or increase costs.

The Cost Associated with Diversification Is