The Principle of Diversification Tells Us That

question 81

Multiple Choice

The principle of diversification tells us that

• A)concentrating a portfolio in three companies within the same industry will greatly reduce the overall risk of a portfolio.
• B)concentrating a portfolio in two or three large stocks will eliminate all of a portfolio's risk.
• C)spreading an investment across many diverse assets will eliminate all of a portfolio's risk.
• D)spreading an investment across many diverse assets will lower a portfolio's level of risk.
• E)spreading an investment across five diverse companies will not lower a portfolio's level of risk.

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Definitions:

Abdominal Pain

Discomfort or discomfort originating from any area between the chest and groin, often indicating a variety of conditions.

Prolonged Need

A situation or condition requiring extended or continuous support, service, or treatment over a long period.

Middle-Of-The-Night Feedings

The act of feeding an infant or baby during the night to support growth and nutrition.

Seborrhea Dermatitis (Cradle Cap)

A common skin condition affecting infants, characterized by scaly patches on the scalp.