Mostly in financials, risk of portfolio is smaller than that of assets

Answer: Option B

Mostly in financial, risk of portfolio is smaller than that of assets is weighted average. One of the most basic principles of finance is that diversification leads to a reduction in risk unless there is a perfect correlation between the returns on the portfolio investments. Owing to the diversification benefits, standard deviation of a portfolio of investments (stocks, projects, etc.) should be lower than the weighted average of the standard deviations of the individual investments.