The statement "A portfolio is less than the sum of its parts." means
A) it is less expensive to buy a group of assets than to buy those assets individually.
B) portfolio returns will always be lower than the returns on individual stocks.
C) a diversified group of assets will be less volatile than the individual assets within the group.
D) for reasons that are not well understood, the value of a portfolio is less than the sum of the values of its components.

Question

Quizplus · Accepted Answer

This statement reflects the concept of diversification in portfolio management, where combining different assets reduces the overall risk (volatility) compared to the risk levels of individual assets. This does not necessarily mean lower returns or costs, but rather a smoother investment journey.

The Statement "A Portfolio Is Less Than the Sum of Its