The Objective of Diversification in an Investment Portfolio Is

question 89

Multiple Choice

The objective of diversification in an investment portfolio is

• A) to make sure you do not have all your eggs in one basket.
• B) to eliminate non-systematic or company specific risk.
• C) to eliminate systematic portfolio risk.
• D) to hold a lot of strong growth stocks.

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Definitions:

Technically Efficient

Refers to a scenario where a firm or system operates in such a way that it cannot produce more of one good without reducing the output of another, utilizing the least amount of resources.

Considerable Autonomy

The significant freedom and independence given to employees or units to make decisions and perform their work without close supervision.

Bureau of Labor Statistics

A U.S. government agency responsible for collecting, analyzing, and disseminating essential statistical data about labor markets, working conditions, and price changes.

U.S. Labor Force

The total supply of workers in the United States, including both employed and unemployed individuals actively seeking employment.