The Primary Purpose of Portfolio Diversification Is To

question 91

Multiple Choice

The primary purpose of portfolio diversification is to:

• A) increase returns and risks.
• B) eliminate all risks.
• C) eliminate asset-specific risk.
• D) eliminate systematic risk.
• E) lower both returns and risks.

---

Definitions:

Theories

Are systematic explanations of phenomena, often based on observation, experimentation, and reasoning, used to predict outcomes and guide research in various fields of study.

Egoism

Egoism is the ethical stance that treats self-interest as the foundation of morality.

Ethical Egoism

The ethical theory that individuals should act in their own self-interest and that this serves the common good.

Reason

The mental capacity of an individual to consciously make sense of things, establish and verify facts, and change or justify practices based on new or existing information.