The benefit of diversification when constructing a portfolio is that it can eliminate a. speculative bubbles. b. risk aversion. c. firm-specific risk. d. market risk.

pleitatsj1

pleitatsj1

Answered question

2022-08-09

The benefit of diversification when constructing a portfolio is that it can eliminate
a. speculative bubbles.
b. risk aversion.
c. firm-specific risk.
d. market risk.

Answer & Explanation

Bryant Liu

Bryant Liu

Beginner2022-08-10Added 15 answers

By investing in 20 different companies instead of just one, diversification eliminates the possibility of firm-specific risk. If you were just invested in1 firm, you are exposing yourself to heightened level of risk because the future of the one specific firm is entirely unpredictable.
Answer:
c.film-specific risk.

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