Using the Markowitz Portfolio Approach,diversification

Using the Markowitz Portfolio Approach,diversification:

A) increases risks and low correlation between assets indicates diversification potential,so low correlation between assets suggests that a firm is in a risk-prone position.
B) increases risks and high correlation between assets indicates low diversification potential,so firms with low correlations have undertaken too much risk.
C) reduces risk and low correlation between assets indicates diversification potential,so low correlation between assets offers a firm the opportunity to reduce risks.
D) reduces risk and low correlation between assets indicates a lack of diversification,so low correlation between assets indicates that the firm needs to reconsider its risks.

Correct Answer:

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