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How does diversification affect the overall risk of a portfolio? Question 2 7 Answer a . It increases the overall risk. b . It decreases

How does diversification affect the overall risk of a portfolio?

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27

Answer

.

It increases the overall risk.

.

It decreases the overall risk by spreading it across various assets.

.

It has no impact on the overall risk.

.

It transforms systematic risk into unsystematic risk.

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