The Purpose of Diversification or Asset Allocation Is to Spread

question 5

True/False

The purpose of diversification or asset allocation is to spread your assets among several different types of investments to decrease risk.

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

GAAP Estimate

An accounting estimate made following Generally Accepted Accounting Principles guidelines.

Prior-Period Adjustment

Corrections made to an organisation’s financial statements for errors found in the financials of preceding periods.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all unrealized gains and losses.