A risk-neutral saver
A)can eliminate the market risk in his or her portfolio through diversification.
B)gains nothing from diversification.
C)benefits from diversification more than does the risk-averse saver.
D)actually increases the risk in his or her portfolio by diversification.

Question

Quizplus · Accepted Answer

Risk-neutral savers are indifferent to risk; they care only about the expected return. Therefore, diversification, which is primarily aimed at reducing risk, does not provide them with any additional utility or benefit.

A Risk-Neutral Saver