$16$

Multiple Choice $1\mathrm{.}5$ points

Which statement about portfolio diversification is correct?

Typically, as more securities are added to a portfolio, total risk would be expected to decrease at a decreasing rate.

The risk$-$reducing benefits of diversification do not occur meaningfully until at least $50-60$ individual securities have been purchased.

None of the statements are correct.

Proper diversification can eliminate systematic risk.

Because diversification reduces a portfolio's total risk, it necessarily reduces the portfolio's expected return.

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