The more ________ the returns of individual investments in a portfolio, the more ________ the portfolio's returns are over time.
A) similar; volatile
B) different; volatile
C) steady; unsteady
D) aggressive; predictable

Question

Quizplus · Accepted Answer

When the returns of individual investments in a portfolio are more similar, the portfolio's returns tend to be more volatile because the lack of diversification increases the impact of any single investment's performance on the overall portfolio.

The More ________ the Returns of Individual Investments in a Portfolio