Which statement is TRUE?
A) To reduce portfolio risk, you should buy the majority of stocks from the industry that you work in.
B) The riskiest stocks are those that move up and down the most with the overall economy.
C) NASDAQ is composed of fewer stocks than the S&P 500.
D) The least risky assets are positively correlated with your portfolio.

Question

Quizplus · Accepted Answer

The statement that the riskiest stocks are those that move up and down the most with the overall economy is true because they are usually more sensitive to economic fluctuations and tend to experience higher volatility. A diversification strategy can help to reduce portfolio risk by including a mix of stocks from different industries and sectors, rather than solely focusing on one specific industry. Choosing assets that are negatively correlated or uncorrelated with your portfolio can also help to reduce overall risk. Therefore, option B is the only true statement among the given options.

Which Statement Is TRUE