To Reduce the Risk of Investing in an Individual Stock

question 310

Multiple Choice

To reduce the risk of investing in an individual stock, an ownership position in many different companies can be achieved by purchasing shares in a(n)

• A) indexed security.
• B) mutual fund.
• C) diversification bond.
• D) stock cooperative.

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Definitions:

Causal Connections

The relationship between causes and effects, where one event is understood to be the result of another.

Existing Theories

Refers to the set of established hypotheses and concepts that seek to explain or interpret aspects of reality.

Causal Connection

A relationship between two events where one event is understood to be a direct result of the other.

Random Sample

A subset of individuals chosen from a larger set, where each individual has an equal chance of being selected.