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Q:
A) spreading an investment across many diverse assets will eliminate some of the total risk | B) concentrating an investment in two or three large stocks will eliminate all of the unsystematic risk |
C) spreading an investment across five diverse companies will not lower the total risk | D) concentrating an investment in three companies all within the same industry will greatly reduce the systematic risk |
Answer: A) spreading an investment across many diverse assets will eliminate some of the total risk
Explanation:
Explanation:
The principle of diversification tells us that spreading an investment across many diverse assets will eliminate some of the total risk.