The Principle of Diversification Tells Us That

question 23

Multiple Choice

The principle of diversification tells us that:

• A)concentrating an investment in two or three large stocks will eliminate all your risk.
• B)concentrating an investment in three companies all within the same industry will greatly reduce your overall risk.
• C)spreading an investment across five diverse companies will not lower your overall risk.
• D)spreading an investment across many diverse assets will eliminate all the risk.
• E)spreading an investment across many diverse assets will eliminate idiosyncratic risk.

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Definitions:

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Managing Stress

Techniques and strategies aimed at reducing stress levels and enhancing an individual's ability to cope with stressors.

High-Level Executives

Individuals who hold top-tier management positions within an organization, responsible for making strategic decisions that affect the overall direction and success of the company.

Competent to Stand Trial

A legal determination that a defendant has sufficient present ability to understand the legal proceedings and participate adequately in their own defense.