Options
-
It reduces unsystematic risk by investing across various assets
Correct answer
- B
It eliminates all types of investment risk
- C
It involves investing only in one asset class
- D
It guarantees higher returns
Why this is the answer
Diversification spreads investments across different assets to minimize unsystematic (specific) risks.
Test yourself for real
Take a full NISM Series XXI-A mock test.
Same duration, same weighting, same difficulty distribution as the real exam — with explanations on every question.