If an Investor Buys Enough Stocks, He or She Can

question 57

True/False

If an investor buys enough stocks, he or she can, through diversification, eliminate all of the market risk inherent in owning stocks, but as a general rule it will not be possible to eliminate all diversifiable risk.

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Definitions:

Real GDP

Real GDP measures the value of all final goods and services produced within a country’s borders in a specific period, adjusted for inflation.

Aggregate Supply Curve

A graphical representation that shows the total quantity of goods and services that producers in an economy are willing to supply at different price levels during a specific time period.

Total Investment

Total investment refers to the sum of all expenditures on capital goods by businesses and government within a specific time period.

Keynesian Range

A segment of the aggregate supply curve where output can increase without an increase in price levels, related to Keynesian economics theories.