Portfolio Risk Is Best Reduced Through Diversification into Stocks in Fundamentally

question 1

True/False

Portfolio risk is best reduced through diversification into stocks in fundamentally different industries.

---

Definitions:

Firm's Securities

Financial instruments issued by a company, such as stocks or bonds, representing ownership or creditorship in the firm.

Preferred Dividends

Dividends that are allocated and paid to preferred shareholders before any dividends can be issued to common shareholders.

Voting Rights

The rights of shareholders to vote on company matters, typically exercised at annual meetings.

Dow Jones Industrial Average (DJIA)

A stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States, representing a significant indicator of the market's overall health.