The Object of Diversification Is

question 69

Multiple Choice

The object of diversification is:

• A) to reduce risk and fluctuations in income.
• B) to reduce risk, but not to reduce fluctuations in income.
• C) to reduce fluctuations in income, but not to reduce risk.
• D) neither to reduce risk, nor to reduce fluctuations in income.

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Definitions:

Advanced Calculus

A branch of mathematics focusing on the study of rates of change (differential calculus) and the accumulation of quantities (integral calculus), often dealing with more complex concepts than those in introductory calculus.

Risk Tolerance

An investor's capacity to endure market volatility and the possibility of losing money on investments.

Financial Security

An investment instrument issued by corporations, governments, or other entities that signifies ownership or a creditor relationship and promises payment of a financial obligation.

Risk-Averse Investors

Individuals who prefer to minimize their exposure to risk and are often willing to accept lower returns in exchange for greater certainty.