Ed is investment manager of the Nellor Foundation, a charitable trust. Recently, Ed met with the president of the Foundation. Up until now, assets have been invested in financial assets. Ed told the president that after performing a simulation, he would like to add a high$-$yielding, higher risk real estate investment to the portfolio. When the president asked if it would be too risky, Ed replied, $"$It will actually increase expected returns while reducing risk." The purported reduction in risk occurs because

Select one:

A$.$ The real estate investment returns are negatively correlated with the other assets.

B$.$ The real estate investment will not be large enough to significantly impact on the portfolio.

C$.$ Rental income generated by the real estate investment is not taxable.

D$.$ Taxes on real estate investments may be deferred.