Diversification provides a benefit to investors when the investor selects two or more securities whose returns are better than the average market return. finds the security with the optimal expected rate of return. selects two or more securities whose returns are not highly correlated with each other. buys only risk-free Treasury securities.

Palmer frosted flakes company offers its customers a pottery cereal bowl if they send in 3 boxtops from palmer frosted flakes boxes and $1. the company estimates that 60% of the boxtops will be redeemed. in 2012, the company sold 675,000 boxes of frosted flakes and customers redeemed 330,000 boxtops receiving 110,000 bowls. if the bowls cost palmer company $3 each, how much liability for outstanding premiums should be recorded at the end of 2012?