Why Is the Practice of Holding Many Different Securities in Many

question 123

Multiple Choice

Why is the practice of holding many different securities in many different sectors considered a desirable strategy?

• A) because the returns are higher
• B) because it helps reduce risk
• C) because it is more affordable
• D) because no one group is unhappy

---

Definitions:

Pure-monopoly Market

A market structure where a single firm has the exclusive control over the supply of a product or service, with no close substitutes available, allowing for price setting.

X-inefficiency

The difference between actual and minimum possible input costs, often occurring due to a lack of competitive pressure and inefficiencies in production.

Minimum Possible Average Cost

The lowest average cost at which a firm can produce its output in the long run, given its technology and factor prices.