CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Diversification reduces ______.

A. returns
B. risks
C. earnings
Correct Answer: B

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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