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Basic Question 1 of 2
Diversification reduces ______.
B. risks
C. earnings
A. returns
B. risks
C. earnings
User Contributed Comments 7
| User | Comment |
|---|---|
| JohnOD | Got that one. |
| tjmcd86 | Isn't A correct as well? |
| johntan1979 | Diversification maximizes returns, not reduce it. |
| gill15 | It doesnt maximize returns it just reduces risk. |
| mpasternack | It maximizes returns for a given level of risk. |
| ankurwa10 | please read the question, it says reduces (not being pedantic, i often commit the mistake of not reading the question fully, sill i know) |
| ascruggs92 | Diversification seeks to maximize return for a given level or risk, or minimize risk for a desired return. You cannot say that diversification minimizes or maximizes returns themselves, just your chances of achieving a desired return |
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Learning Outcome Statements
describe the portfolio approach to investing
CFA® 2026 Level I Curriculum, Volume 6, Module 3.