n NISM Certifications
NSM General NISM
Medium

With respect to investments, what does 'Diversification' mean?

Practice question from NISM Series IV - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Insuring against market risks

  2. Minimizing market risks

    Correct answer

  3. C

    Taking market risks

  4. D

    Eliminating market risks

Why this is the answer

Diversification reduces unsystematic risk, not total market risk.

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