Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Which best describes the principle of diversification? A portfolio containing four companies all within the same sector will greatly reduce market risk. A portfolio containing

image text in transcribed
Which best describes the principle of diversification? A portfolio containing four companies all within the same sector will greatly reduce market risk. A portfolio containing two or three large stocks will eliminate all of the unsystematic risk. A portfolio containing five diverse companies will not lower total risk. A portfolio containing diverse assets will eliminate all of the systematic risk. Adding diverse assets to a portfolio will reduce some total risk

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Risk Modeling Evaluation Handbook Rethinking Financial Risk Management Methodologies In The Global Capital Markets

Authors: Greg Gregoriou, Christian Hoppe, Carsten Wehn

1st Edition

0071663703, 978-0071663700

More Books

Students also viewed these Finance questions

Question

Which is better, cable modem or DSL? Explain.

Answered: 1 week ago

Question

Identify three types of physicians and their roles in health care.

Answered: 1 week ago

Question

Compare the types of managed care organizations (MCOs).

Answered: 1 week ago