Diversification Is Investing in a Variety of Assets with Which

question 14

Multiple Choice

Diversification is investing in a variety of assets with which one of the following as the primary goal?

• A) increasing returns
• B) minimizing taxes
• C) reducing some risks
• D) eliminating all risks
• E) increasing the variance

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Definitions:

Deep Discount

A significant reduction in price offered on a product or service, often to clear inventory or attract buyers.

Coupon Bond

A debt security that pays the holder a fixed interest rate (coupon) over a specified period until its maturity.

Indenture Agreement

A formal contract between a bond issuer and a bondholder that specifies the terms of the bond.

Call Provision

A feature of a bond that allows the issuer to repay the bond before its maturity date.