A stock might be quite risky if held by itself, but if much of this total (stand-alone) risk can be eliminated through diversification, then its relevant risk-that is, its contribution to the portfolio's risk-is much smaller than its total risk.
Answer the following statement true (T) or false (F)
True
A stock might be quite risky if held by itself, but if much of this total (stand-alone) risk can be eliminated through diversification, then its relevant risk—that is, its contribution to the portfolio's risk—is much smaller than its total risk. See 8-3: Portfolio Risk—Holding Combinations of Investments
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