Sue, David, and Peter hold portfolios with 15, 60 and 500 randomly selected stocks, respectively. Each is considering adding the same basket of 10 additional randomly selected stocks to their portfolio. None of the 10 stocks in this basket are in any of their current portfolios. Who will most likely achieve the greatest diversification benefit (i.e. additional reduction in risk) by adding these additional 10 securities? Group of answer choices

OPTIONS:

Each will achieve the same degree of diversification benefit, since each is adding the same basket of stocks to their existing portfolio

David

Sue

Peter