Buying Several Different Investment Alternatives to Spread the Risk Helps

question 68

Multiple Choice

Buying several different investment alternatives to spread the risk helps an investor achieve

• A) lower rates of return.
• B) lower commission fees.
• C) isolation.
• D) diversification.

---

Definitions:

Income Distributions

Periodic payments made to investors from funds generated through dividends or interest by an investment fund or income-generating asset.

Rate of Return

Financial returns or setbacks on an investment over a specific duration, expressed in terms of a percentage of the investment's purchase price.

Actively Managed Mutual Funds

Investment funds where fund managers actively make decisions about buying and selling stocks or bonds to beat the market.

Passive Indexes

Investment funds designed to mimic the composition and performance of a designated market index, thereby minimizing management decisions and costs.