which statement is true regarding diversification a. The greater systematic risk, the greater return should be...

which statement is true regarding diversification

a. The greater systematic risk, the greater return should be required

b. systematic risk is diversifiable

c. portfolio diversification address systematic risk

d. none of the above

Expert Solution

Option a is correct

The higher the systematic risk (non-diversifiable risk), the higher the rate of return investors will require to compensate them for bearing the risk.

As systematic risk is non-diversified, investors need extra required rate of return.

Other options b, c are incorrect

jeff jeffy answered 2 years ago

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