Financial Risk Management Practice Test
Financial Risk Management Portfolio Risk Management
What does 'diversification' mean in the context of portfolio risk management?
Select your answer
A
Investing only in assets with the highest expected returns
B
Spreading investments across assets with low or negative correlations to reduce overall portfolio risk without proportionally reducing expected return
C
Allocating equally across all available asset classes regardless of risk
D
Concentrating in one asset class to maximize Sharpe ratio
Hint
