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 the above.

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