Diversifying to Reduce Volatility Is A

question 16

Multiple Choice

Diversifying to reduce volatility is a:

• A) good idea only if shareholders can hold a diversified portfolio.
• B) good idea only if managers cannot hold a diversified portfolio.
• C) good idea only if managers can hold a diversified portfolio.
• D) good idea only if shareholders cannot hold a diversified portfolio.

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Definitions:

Cash Distribution

The process of disbursing funds from a company, trust, or fund to its owners, partners, or investors.

Capital Balances

The amount of capital credited to the owners or partners in a company, reflecting their ownership interest.

Income Ratio

A financial metric that compares different aspects of an entity's income, showing the relationship between two or more income-related figures.

Capital Balance

The amount of money that a company has in its accounts, representing the capital owned by the investors or owners.