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Portfolio diversification protects an investor mainly against:

ASystematic risk
BInflation risk
CCurrency risk
DUnsystematic risk
Answer & Solution
Correct answer: D. Unsystematic risk
1. Spreading across firms dilutes single firm shocks. 2. It cannot remove market wide shocks. 3. So it protects against unsystematic risk. _Source: OpenStax Principles of Finance, Chapter 15, Risk and Return._
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