The Main Reason for Diversifying a Portfolio Is

question 41

Multiple Choice

The main reason for diversifying a portfolio is

• A)to take advantage of the fact that returns on assets are imperfectly correlated.
• B)to take advantage of the favorable tax treatments diversified portfolios receive from the federal government.
• C)that diversified portfolios have greater liquidity than undiversified portfolios.
• D)that diversified portfolios have lower information costs than undiversified portfolios.

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Definitions:

Return on Marketing Investment

The profitability and efficiency of marketing efforts, measured by the revenue generated from marketing activities divided by the cost of those activities.

Mission Statement

A concise declaration of an organization's core purpose and focus that informs its strategies and decision-making.

Business Directive

A formal instruction or policy issued by a company's upper management outlining goals, strategies, or actions to be taken by the organization.

Customer Value

The perceived benefits, both monetary and nonmonetary, that a customer receives from a product compared with the cost of obtaining it.