To Reduce the Risk of Investing in an Individual Stock

question 310

Multiple Choice

To reduce the risk of investing in an individual stock, an ownership position in many different companies can be achieved by purchasing shares in a(n)

• A) indexed security.
• B) mutual fund.
• C) diversification bond.
• D) stock cooperative.

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Definitions:

Output

Refers to the total quantity of goods or services produced by an individual, company, or economy.

Expand

The process of increasing the scale, scope, or reach of an operation, business, or system, often aiming for growth or diversification.

Fixed Cost

Costs that do not vary with the level of output or activity, remaining constant regardless of production volume.