If Your Portfolio Currently Consists of Common Stock in Three

question 2

Multiple Choice

If your portfolio currently consists of common stock in three companies, you could increase your diversification by all of the following, except

• A) selling one of the companies and putting the money in a bond.
• B) selling one of the companies and putting the money in a REIT.
• C) buying another stock.
• D) selling one of the companies and putting the money in the other two.

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Definitions:

Confounding Variables

Factors other than the independent variable that might influence the outcome of an experiment, making it difficult to isolate the effect of the independent variable.

Random Allocation

A method used in experiments where participants are assigned to different groups in a way that ensures each participant has an equal chance of being placed in any group.

Experimenter Bias

A phenomenon where the expectations or beliefs of the researcher unconsciously affect the outcome of an experiment.

Socially Desirable

Describes behaviors or responses that are likely to be approved of or valued by society or a social group.