Which of the following statements is MOST correct concerning diversification and risk? Select one: Proper diversification generally results in the elimination of risk Only wealthy investors can diversify their portfolios because a portfolio must contain at least 50 stocks to gain the benefits of diversification. Risk-averse investors often choose companies from different industries for their portfolios because the correlation of returns is less than if all the companies came from the same industry. Risk-averse investors often select portfolios that include only companies from the same industry group because the familiarity reduces the risk
Which of the following statements is MOST correct concerning diversification and risk? Select one: Proper diversification generally results in the elimination of risk Only wealthy investors can diversify their portfolios because a portfolio must contain at least 50 stocks to gain the benefits of diversification. Risk-averse investors often choose companies from different industries for their portfolios because the correlation of returns is less than if all the companies came from the same industry. Risk-averse investors often select portfolios that include only companies from the same industry group because the familiarity reduces the risk
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter25: Portfolio Theory And Asset Pricing Models
Section: Chapter Questions
Problem 8MC: You have been hired at the investment firm of Bowers & Noon. One of its clients doesn’t understand...
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Which of the following statements is MOST correct concerning diversification and risk?
Select one:
Proper diversification generally results in the elimination of risk
Only wealthy investors can diversify their portfolios because a portfolio must contain at least 50 stocks to gain the benefits of diversification.
Risk-averse investors often choose companies from different industries for their portfolios because the correlation of returns is less than if all the companies came from the same industry.
Risk-averse investors often select portfolios that include only companies from the same industry group because the familiarity reduces the risk.
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