In order to adequately diversify a portfolio,you need to buy a minimum of ________ securities.
A)5
B)20
C)75
D)115

Question

Quizplus · Accepted Answer

According to the modern portfolio theory, to adequately diversify a portfolio, you need to own at least 20 different securities. This number may vary depending on the risk tolerance and investment goals of the individual, but generally, a minimum of 20 securities is recommended to reduce the risk of concentration in any one stock or sector. A portfolio with fewer than 20 securities may be under-diversified, which increases the risk of volatility and potentially lower returns.

In Order to Adequately Diversify a Portfolio,you Need to Buy