The Major Benefit of Diversification Is To

question 73

Multiple Choice

The major benefit of diversification is to:

• A) increase the expected return.
• B) remove negative risk assets from the portfolio.
• C) reduce the portfolio's systematic risk.
• D) reduce the expected risk.

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Definitions:

Finished Goods Inventory

The stock of completed products that are ready to be sold.

Underapplied

Describes the situation where the allocated manufacturing overhead is less than the actual manufacturing overhead incurred.

Overapplied

A situation in which the allocated manufacturing overhead cost is more than the actual overhead cost incurred.

Overapplied Manufacturing Overhead

Occurs when the amount of overhead applied to products or jobs during a period is greater than the actual overhead costs incurred.