Which of the Following Are Investor Diversification Problems

question 110

Multiple Choice

Which of the following are investor diversification problems?

• A) Many employees hold mostly their employer's stocks as investments.
• B) Many households hold relatively few individual stocks-the median is three.
• C) Investors seem to prefer local firms thereby limiting diversification opportunities.
• D) All of these choices are correct.

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Definitions:

Semiannually

Occurring twice a year or every six months.

Present Value

The current assessment of a future cash sum or cash flow streams, discounted at a defined rate of return.

Coupon

The interest payment made to bondholders, typically expressed as an annual percentage of the bond's face value.

Coupon Bond

A type of bond that offers periodic interest payments to the holder through fixed "coupons" and the return of the principal at maturity.