What is the difference between asset allocation and diversification?

What is the difference between asset allocation and diversification?

• A. Asset allocation spreads risk within each class; diversification assigns weights to asset classes.
• B. Asset allocation assigns weights to asset classes; diversification spreads risk within each class.
• C. Asset allocation is about selecting securities within a class; diversification adds asset classes.
• D. Asset allocation focuses on market timing to maximize returns; diversification eliminates risk.

Answer: (B)