The correct answer is: B. diversified portfolio.
A diversified portfolio is a collection of assets that are not correlated with each other. This means that if one asset goes down in value, the others in the portfolio may not be affected, or may even go up in value. This can help to reduce the overall risk of the portfolio.
A low-risk portfolio is a collection of assets that are considered to be safe and stable. These assets typically have low volatility and are not likely to lose much value in a downturn. However, they also tend to have low returns.
An undiversified portfolio is a collection of assets that are all correlated with each other. This means that if one asset goes down in value, the others in the portfolio are likely to go down in value as well. This can increase the overall risk of the portfolio.
A high-risk portfolio is a collection of assets that are considered to be risky and volatile. These assets typically have high returns, but they also have a high risk of losing value.
In conclusion, the risk in average individual stock can be reduced by placing an individual stock in a diversified portfolio. This is because a diversified portfolio will contain assets that are not correlated with each other, which can help to reduce the overall risk of the portfolio.