Which of the Following Is NOT a Portfolio Diversification Technique

question 10

Multiple Choice

Which of the following is NOT a portfolio diversification technique used by portfolio managers?

• A)Diversify by type of security.
• B)Diversify by the size of capitalization of the securities held.
• C)Diversify by country.
• D)All of the above are diversification techniques.

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Definitions:

Operating Cash Flow

An indicator of the money produced through the regular business activities of a company.

Noncash Deductions

Expenses that reduce taxable income but do not involve an actual cash outlay, such as depreciation.

Net Working Capital

The disparity between a firm's existing assets and its immediate debts.

NPV Computation

The process of calculating the Net Present Value of an investment, which assesses the profitability by comparing the present value of cash inflows to the initial investment.