n NISM Certifications
X NISM Series X
Medium

Diversification in a portfolio most significantly impacts which risk?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Market risk

  2. B

    Transactional risk

  3. Company-specific risk

    Correct answer

  4. D

    All of the above

Why this is the answer

Diversification reduces risk unique to individual companies, which can be mitigated by holding a broad mix of different stocks.

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