The Main Reason for Diversification for an Investor Is To

question 8

Multiple Choice

The main reason for diversification for an investor is to:

• A) take advantage of the fact that returns of assets are perfectly positively correlated.
• B) take advantage of the fact that returns on assets are not perfectly correlated.
• C) lower transaction costs.
• D) gain from the greater returns that come from greater risk.

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Definitions:

Responsibility

The state or fact of having a duty to deal with something or of having control over someone, often with accountable outcomes.

Organisational Design

The process of structuring an organisation's roles, responsibilities, and relationships to achieve its goals and objectives efficiently.

Bureaucratic Designs

Organizational structures that are characterized by clear hierarchies, division of labor, strict regulations, and formal procedures.

Adaptive Designs

Flexible approaches in experimental research that allow for adjustments while the experiment is ongoing, primarily based on interim results.