In the context of investments in securities (stocks and bonds),portfolio risk diversification refers to:

Question

Quizplus · Accepted Answer

Portfolio risk diversification refers to the process of spreading investments across different securities to reduce the risk of loss. This involves not putting all one's money in one type of asset or one company, but rather holding different securities that are less than perfectly positively correlated. The less correlated the securities in a portfolio, the lower the portfolio risk. Therefore, all the choices mentioned - the time-honored adage "Don't put all your eggs in one basket", investors' ability to reduce portfolio risk by holding securities that are less than perfectly positively correlated, and the fact that less correlated securities in a portfolio lower the portfolio risk - are correct.

In the Context of Investments in Securities (Stocks and Bonds),portfolio