n NISM Certifications
X NISM Series X
Medium

Diversification of risk in equity markets is achieved due to ____.

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 7 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Diversification of business by companies

  2. B

    Positive co-movement with economic indicators

  3. C

    Time lag in macroeconomic responses

  4. Cyclicality in business

    Correct answer

Why this is the answer

Investing across sectors with different cyclical behaviors reduces overall portfolio risk.

Test yourself for real

Take a full NISM Series X mock test.

Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.