Random diversification will tend to decrease
A) systematic risk.
B) the beta of the portfolio.
C) nonfactor risk.
D) individual security variance.

Name: Random diversification will tend to decrease A) systematic risk. B) the beta of the portfolio. C) nonfactor risk. D) individual security variance.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Random diversification tends to decrease nonfactor risk, also known as unsystematic risk or specific risk, which is the risk associated with individual assets.

Random Diversification Will Tend to Decrease