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Options
- A
Maximize returns regardless of risk
-
Minimize unsystematic (specific) risk by spreading investments across various assets
Correct answer
- C
Achieve the highest possible beta for the portfolio
- D
Ensure all assets are from the same industry to reduce volatility
Why this is the answer
Diversification aims to reduce company-specific risk by holding a variety of assets, thereby protecting the portfolio from adverse movements in any single investment.
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