Complete diversification means that the portfolio is no longer subject to market risk.

Question

Quizplus · Accepted Answer

Complete diversification can help to mitigate or reduce some specific risks, but it cannot completely eliminate market risk. Market risk refers to the overall risk inherent in the entire market, including factors such as economic conditions, interest rates, and geopolitical events, which can affect all investments in the market. Thus, even a fully diversified portfolio can still be subject to market risk.

Complete Diversification Means That the Portfolio Is No Longer Subject