Question: In Chapter 7, we showed that diversification reduces the risk associated with a portfolio of investments. (Most experts advise their clients that the portfolios should

In Chapter 7, we showed that diversification reduces the risk associated with a portfolio of investments. (Most experts advise their clients that the portfolios should contain between 20 and 30 stocks scattered in different industries.) Do investors understand this concept? To help answer this question, a random sample of investors’ portfolios was sampled. This survey was a duplicate of the one done 5 years earlier. The number of stocks in each sampled portfolio was recorded. Do these data allow us to infer that investors’ portfolios are becoming more diverse?

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