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8. True or False. Briefly explain your answers. [Modified BKM Question]. a) Diversification can reduce or eliminate systematic risk. b) If diversification reduces a portfolio's
8. True or False. Briefly explain your answers. [Modified BKM Question].
a) Diversification can reduce or eliminate systematic risk.
b) If diversification reduces a portfolio's total risk, then it reduces the portfolio's expected return as well.
c) As each security in a list of different securities is added to a portfolio, total risk typically would be expected to fall at a decreasing rate.
d) The risk-reducing benefits of diversification do not occur meaningfully until at least 50 different securities are included in the portfolio.
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