Determine risk-reducing benefits of diversification


Which statement about portfolio diversification is correct?

a. Proper diversification can reduce or eliminate systematic risk.

b. Diversification reduces the portfolio's expected return because it reduces a portfolio's total risk.

c. As more securities are added to a portfolio, total risk typically would be expected to

fall at a decreasing rate.

d. The risk-reducing benefits of diversification do not occur meaningfully until at least 30 individual securities are included in the portfolio.

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Finance Basics: Determine risk-reducing benefits of diversification
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