Which of the following statements is MOST correct concerning diversifi

Which of the following statements is MOST correct concerning diversification and risk?

A) Proper diversification generally results in the elimination of risk.
B) Risk-averse investors often choose companies from different industries for their portfolios
because the correlation of returns is less than if all the companies came from the same
industry.
C) Risk-averse investors often select portfolios that include only companies from the same
industry group because the familiarity reduces the risk.
D) Only wealthy investors can diversify their portfolios because a portfolio must contain at least
50 stocks to gain the benefits of diversification.

ANSWER

B