Holding Many Risky Assets and Thus Reducing the Overall Risk

question 110

Multiple Choice

Holding many risky assets and thus reducing the overall risk an investor faces is called

• A)diversification.
• B)foolishness.
• C)risk acceptance.
• D)capitalization.

---

Definitions:

MIGA

The Multilateral Investment Guarantee Agency, an international organization that offers political risk insurance and credit enhancement to investors and lenders.

Developing Nations

Countries with lower levels of socioeconomic development, characterized by lower incomes, less industrialization, and often higher levels of poverty compared to developed countries.

World Bank

A worldwide financial entity that supplies loans and grants to the governments of developing countries to support capital project initiatives.

Intellectual Property

Legal rights that protect creations of the mind, such as inventions, literary and artistic works, designs, and symbols.