Risk Diversification Is Based on the Principle That

question 13

Multiple Choice

Risk diversification is based on the principle that:

• A) one should not be exposed to only one event
• B) one should put all her "eggs in one basket"
• C) risk can be measured subjectively
• D) pure risk seldom happens

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Definitions:

Mean

The average of a set of numbers, calculated by adding them together and dividing by the number of values in the set.

Standard Deviation

A metric that quantifies the spread or variability of a series of values, illustrating the extent to which these values vary from their central average.

Z-Score

A measure of how many standard deviations a data point is from the mean.

Free Throw Line

A line on a basketball court 15 feet from the basket where players take unopposed shots worth one point each.