The Major Benefit of Diversification Is To

question 28

Multiple Choice

The major benefit of diversification is to:

• A) increase the expected return.
• B) decrease the expected return.
• C) decrease the risk.
• D) make the stock market more efficient.
• E) increase investor participation in the market.

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Definitions:

Overproduction

The situation where more goods or services are produced than are demanded, causing prices to drop or resources to be wasted.

European Community

The European Community was a regional organization aimed at integrating its member states economically and politically, serving as a precursor to the European Union.

Subsidies

Financial contributions provided by governments to support businesses, reduce the prices of commodities, or encourage activities beneficial to the public interest.

Freedom To Farm Act

A law passed in 1996 in the United States designed to phase out certain agricultural subsidies and give farmers more planting flexibility.