Which of the following are possible explanations for incomplete portfolio diversification?
I.Transaction costs
II.Home bias
III.Information costs
IV.Taxes

Question

Quizplus · Accepted Answer

All the options listed (Transaction costs, Home bias, Information costs, and Taxes) are valid reasons why an investor might not fully diversify their portfolio. Transaction and information costs can make it expensive to diversify, home bias leads investors to prefer domestic investments, and taxes can affect the attractiveness of certain investments, influencing diversification decisions.

Which of the Following Are Possible Explanations for Incomplete Portfolio