Question: 1 Which statement is most correct regarding modern portfolio theory? a Because the stock market is inherently risky, most investors should avoid stock exposure unless

1

Which statement is most correct regarding modern portfolio theory?

a Because the stock market is inherently risky, most investors should avoid stock exposure unless very wealthy

b While diversification can enhance returns, it cannot be used to reduce risk of a portfolio

c While diversification can reduce risk, it cannot be used to enhance returns of a portfolio

d Diversification allows an investor to maximize return at a given risk point, or minimize risk at a desired rate of return

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