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Basic Question 0 of 14
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 |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
calculate and interpret measures of fit and formulate and evaluate tests off it and of regression coefficients in a simple linear regression
CFA® 2025 Level I Curriculum, Volume 1, Module 10.