Which of the Following Is True of Financial Diversification

question 113

Multiple Choice

Which of the following is true of financial diversification?

• A) Corporate and state laws allow individuals to hold securities only within one market sector and for short periods.
• B) The practice of holding assorted securities in different sectors is considered highly risky.
• C) Holding diversified portfolios proves to be cost-effective.
• D) Investing in a large number of individual securities is time consuming than investing in exchange-traded funds.

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Definitions:

Low-income Residents

Individuals or families living with earnings that fall below a designated threshold, often leading to financial insecurity.

Framework

A fundamental structure used as a guide to build, analyze, or understand something complex.

Social Problems

Issues within a society that adversely affect individuals and communities, often requiring collective solutions.

Inequality

The state of being unequal in status, rights, or opportunities, often leading to unfair treatment or disparities among individuals or groups.