Your Broker Tells You That It Is Important to Diversify

question 109

True/False

Your broker tells you that it is important to diversify because doing so will increase your expected returns,even if you diversify by randomly selecting stocks (naive diversification).

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Definitions:

APS

Automatic Payment System, a system allowing for automatic transfers of payments, often in financial contexts; the term can refer to multiple concepts depending on the context.

Savings

Money that is set aside from one's income or earnings for future use, often accumulating interest.

Saving

The portion of income that is not spent on immediate consumption but is set aside for future use, often in investments or deposits.

Disposable Income

The available amount for households to spend and save, subsequent to income tax deductions.