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Which of the following is a correct interpretation on the graph? Domestic portfolio diversification does not reduce portfolio risk. As the portfolio holds more and

  1. Which of the following is a correct interpretation on the graph?

image text in transcribed

  1. Domestic portfolio diversification does not reduce portfolio risk.
  2. As the portfolio holds more and more stocks, the portfolio risk steadily increases.
  3. International portfolio diversification can achieve a greater portfolio risk reduction than domestic portfolio diversification.
  4. The portfolio risk can be fully eliminated through international portfolio diversification.
Swiss stocks U.S. stocks Portfolio Risk (%) ---- - - - - - - - - - - - - - - 1 10 20 30 International stocks 40 50 Number of Stocks

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