Diversification reduces:
✓ Correct Answer: Option B
Diversification: combining different assets reduces unsystematic risk (company-specific events). Systematic risk (market-wide factors) cannot be diversified away — only hedged.
📚 About This Pre-MBA Exam Prep Practice Question
This 2-level Pre-MBA Exam Prep question from the Finance topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.
How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free Pre-MBA Exam Prep practice test or use flashcards for spaced repetition review.