The Principle of Diversification States That Spreading an Investment Over

question 245

Multiple Choice

The principle of diversification states that spreading an investment over a number of assets will eliminate:

• A) All of the risk.
• B) All of the systematic risk and part of the unsystematic risk.
• C) All of the unsystematic risk and part of the systematic risk.
• D) Most of the systematic risk.
• E) Most of the unsystematic risk.

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Definitions:

Nonprofit Organizations

Entities that operate for purposes other than generating profit, focusing instead on social, educational, charitable, or religious objectives.

Complementary

Something that completes or goes well with something else, enhancing its qualities or effectiveness.

Pay-For-Success

A funding model where payment is contingent on achieving agreed-upon results, often used in social service and public sector projects to align funding with outcomes.

Social Impact Bond

A financial instrument that raises private investment to fund public or social services, with returns to investors contingent on achieving predetermined social outcomes.