Discuss the Pitfalls of Too Much Diversification And, More Specifically

question 28

Essay

Discuss the pitfalls of too much diversification and, more specifically, overdiversification.

---

Definitions:

Time Periods

Specific durations of time used for accounting purposes, such as fiscal quarters or years.

Discounted

The process of determining the present value of a future amount by applying a discount rate.

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specified rate of return.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return or discount rate.