Which one of the following is least apt to reduce the unsystematic risk of a portfolio?
A)reducing the number of stocks held in the portfolio
B)adding bonds to a stock portfolio
C)adding international securities into a portfolio of U.S. stocks
D)adding U.S. Treasury bills to a risky portfolio
E)adding technology stocks to a portfolio of industrial stocks

Question

Quizplus · Accepted Answer

Reducing the number of stocks held in the portfolio may result in concentration risk, which may increase unsystematic risk. In contrast, the other options involve adding assets that are less correlated with the existing assets, which may reduce unsystematic risk. Therefore, option A is the least apt to reduce unsystematic risk.

Which One of the Following Is Least Apt to Reduce