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Which two of the following five statements are correct? Select two alternatives: Diversification eliminates systematic risk but not idiosyncratic risk. The higher the return, the
Which two of the following five statements are correct? Select two alternatives: Diversification eliminates systematic risk but not idiosyncratic risk. The higher the return, the higher the risk, this holds both for individual stocks and diversified portfolios. Individual stocks in general do not offer the same amount of return at a lower level of risk compared to well diversified portfolios. If the risk of an investment can be reduced by diversification, then investors will not be compensated with a risk premium for this risk. The risk premimum is only related to the undiversifiable systematic risk an investment Volatility is a measure of the average return of stocks
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