Asset allocation improves diversification,but has no effect on the risk premium of your portfolio.

Question

Quizplus · Accepted Answer

Asset allocation can affect the risk premium of your portfolio. By investing in different asset classes with varying levels of risk and return, you can adjust the overall risk and return characteristics of your portfolio. A well-diversified portfolio with proper asset allocation can potentially enhance returns while reducing risk, which can impact the risk premium of the portfolio.

Asset Allocation Improves Diversification,but Has No Effect on the Risk