The decrease in the standard deviation of returns after adding 30 to 40 securities within a country is known as domestic diversification.

Question

Quizplus · Accepted Answer

Domestic diversification refers to the reduction of risks associated with investing in a single security or asset class within a specific country by adding a range of securities to the investment portfolio. By adding more securities, the overall portfolio becomes less volatile, and the standard deviation of returns decreases. So, the statement is true.

The Decrease in the Standard Deviation of Returns After Adding