Which of the Following Is a True Statement About Diversification

question 62

Multiple Choice

Which of the following is a true statement about diversification?

• A) It will increase your overall risk.
• B) It will increase your volatility.
• C) It will decrease the number of investments in your portfolio.
• D) It will increase your chances of obtaining your financial goals.

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Definitions:

Consumer Equilibrium

The state where the allocation of goods and services aligns with consumer preferences, and the marginal utility per dollar spent is equalized across all goods.

Giffin Good

A type of good for which demand increases as the price increases, contrary to the basic laws of demand in economics.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded at those prices.

Substitution Effect

The shift in buying habits caused by alterations in the comparative costs of products, resulting in consumers substituting higher-priced items with those that are more affordable.