Diversification Is the Principle Of

question 69

Multiple Choice

Diversification is the principle of:

• A) eliminating risk.
• B) reducing the risk we carry to just two.
• C) holding more than one asset to reduce risk.
• D) eliminating investments from our portfolio that have idiosyncratic risk.

---

Definitions:

Cash

Currency and other liquid instruments that are used to conduct transactions or settle debts.

Accounts Receivable

Funds that customers owe to a company for products or services already provided but not yet compensated for.

Accounts Payable

A bookkeeping record indicating a business's duty to settle a short-term financial debt with its lenders or vendors.

Cash Flows

The inflows and outflows of cash and cash equivalents, representing the operational, investing, and financing activities of a business.