Statement about diversification

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Reference no: EM131527149

Which of the following is a correct statement about diversification?

To be properly diversified you need over 100 different stocks.

When a stock is combined into a portfolio that is not perfectly correlated with the stock, the standard deviation of the new portfolio will decrease.

Diversifiable or company-specific risk is the only risk that matters to a rational investor.

There is no limit to the amount of risk that can be eliminated through diversification.

Reference no: EM131527149

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