Select the correct statement.

The risk of a stock when it is added to a portfolio is the stock's standard deviation of returns; the risk of a stock when it is your only investment is the stock's beta.

When forming a well-diversified large company portfolio like the S&P 500, the standard deviation (of returns) of the portfolio can be reduced to 0.

If risk aversion increases in the stock market, stock prices will increase.

Diversification allows you to reduce your risk without lowering your return.