The Principle of Diversification Tells Us That

question 94

Multiple Choice

The principle of diversification tells us that:

• A)concentrating an investment in two or three large shares will eliminate all of your risk.
• B)concentrating an investment in three companies all within the same industry will greatly
• Reduce your overall risk.
• C)spreading an investment across five diverse companies will not lower your overall risk at
• All)
• D)spreading an investment across many diverse assets will eliminate all of the risk.
• E)spreading an investment across many diverse assets will eliminate some of the risk.

Comprehend how the burden of a tax is distributed between buyers and sellers.

Analyze graphical representations of market changes due to taxes.

Calculate the tax revenue generated from a tax imposition.

Evaluate the effects of different types of taxes on market outcomes.

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Definitions:

Backdraft

A dangerous explosive phenomenon that can occur when a fire is starved of oxygen and then oxygen is suddenly reintroduced, often during firefighting efforts.

Water Content

The amount of water contained in a material, expressed as a weight percentage of the material.

Wood-Based Smokes

Complex mixtures of particulate matter and chemicals produced by the incomplete combustion of wood materials, often containing toxic compounds.

Carbon Dioxide

An invisible, scentless gas that results from the combustion of carbon and organic materials, as well as from the process of respiration, utilized by plants in photosynthesis.