The Principle of Diversification Tells Us That

question 43

Multiple Choice

The principle of diversification tells us that:

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

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Definitions:

Complicated Grief

A prolonged and intense form of grief that disrupts daily functioning and persists long after a loss.

Clinical Depression

A severe mood disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest in activities, significantly affecting daily functioning.

Alcohol Dependency

A medical condition characterized by a compulsive need to consume alcohol despite the negative impact on one's health and life.

Chronic

Describes a condition or illness persisting for a long time or constantly recurring, often requiring long-term management.