The decrease in the standard deviation of returns after adding 40 to 50 securities within a country is known as domestic diversification.

Question

Quizplus · Accepted Answer

Domestic diversification refers to the decrease in the standard deviation of returns when a portfolio of securities within a country is diversified. Adding 40 to 50 securities within a country can reduce the overall risk of the portfolio, leading to a lower standard deviation. Therefore, the statement is true.

The Decrease in the Standard Deviation of Returns After Adding