Which of the following is incorrect?
A) It is possible to combine assets that all move in the exact same fashion over time and gain the benefits of diversification.
B) Adding long-term Treasury bonds to a stock portfolio will reduce the risk of the portfolio.
C) The optimal portfolio is the one with the lowest amount of risk.
D) All of the statements are correct.

Question

Quizplus · Accepted Answer

Diversification benefits are achieved by combining assets that do not move in the exact same fashion over time. If all assets move identically, there is no reduction in risk through diversification.

Which of the Following Is Incorrect