By combining stocks into a portfolio,we reduce risk through
A) higher expected return.
B) higher rate of return.
C) higher average return.
D) diversification.

Question

Quizplus · Accepted Answer

By diversifying our portfolio, we invest in multiple stocks from different industries and sectors, reducing the risk of any one stock negatively impacting our overall returns. This reduces our portfolio's volatility and can potentially increase our long-term returns. Therefore, diversification is the best answer for reducing risk in a portfolio.

By Combining Stocks into a Portfolio,we Reduce Risk Through