Which of the Following Is True of Financial Diversification

question 113

Multiple Choice

Which of the following is true of financial diversification?

• A) Corporate and state laws allow individuals to hold securities only within one market sector and for short periods.
• B) The practice of holding assorted securities in different sectors is considered highly risky.
• C) Holding diversified portfolios proves to be cost-effective.
• D) Investing in a large number of individual securities is time consuming than investing in exchange-traded funds.

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Definitions:

Fertilization

The process by which a sperm and an ovum—the male and female gametes, respectively—join to form a single new cell.

Gamete

A mature haploid male or female germ cell which is able to unite with another of the opposite sex in sexual reproduction to form a zygote.

Chromosome

A thread-like structure of nucleic acids and protein found in the nucleus of most living cells, carrying genetic information in the form of genes.

Zygote

The initial cell formed when a new organism is produced by the merging of an egg and sperm cell during fertilization.