Which of the Following Is NOT a Portfolio Diversification Technique

question 26

Multiple Choice

Which of the following is NOT a portfolio diversification technique used by portfolio managers?

• A) diversify by type of security
• B) diversify by the size of capitalization of the securities held
• C) diversify by country
• D) All of the above are diversification techniques.

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Definitions:

Economic Costs

The total value of all resources used in the production of a good or service, including both explicit and implicit costs.

Normal Rate

A term often used to refer to the standard or commonly accepted rate for a financial or economic measurement, but can vary by context.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or investment.

Economic Profits

Profits exceeding the opportunity costs of all resources employed, reflecting a return beyond the normal profit level.