n NISM Certifications
XXI NISM Series XXI-A
Medium

How is diversification of risk achieved in an equity portfolio?

Practice question from NISM XXI A for PMS - Mock Test 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    By selecting equity shares whose returns are not so perfectly correlated

  2. B

    By selecting equity shares from different industries

  3. Both of the above

    Correct answer

  4. D

    None of the above

Why this is the answer

Diversification is achieved by selecting stocks with low correlation and from various industries, reducing overall risk.

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