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:

Dividend Reinvestment Plans

Programs that allow investors to automatically reinvest their cash dividends into additional shares or fractional shares of the underlying stock.

Open Market

A freely competitive market where buyers and sellers can engage in transactions with minimal government intervention.

Debt Ratio

A financial ratio that measures the extent of a company's or individual's leverage in relation to the assets they own.

Transaction Costs

Expenses incurred when buying or selling securities, including commissions and the bid-ask spread.