Which of the Following Are Investor Diversification Problems

question 29

Multiple Choice

Which of the following are investor diversification problems?

• A) Many employees hold mostly their employer's stocks as investments.
• B) Many households hold relatively few individual stocks-the median is three.
• C) Investors seem to prefer local firms thereby limiting diversification opportunities.
• D) All of the options are investor diversification problems.

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Definitions:

Annual Percentage Rate

The cost of borrowing or the yield from an investment, expressed as a single percentage number that represents the yearly cost over the term of a loan or income from an investment.

Interest Rate

The payment, specified as a percentage of the principal, necessitated by a lender from a borrower for employing assets.

Required By Law

Mandated actions or procedures as stipulated by legislation or legal statutes.

Compounded Annually

The process of calculating interest on both the initial principal and the accumulated interest from previous periods, applied once per year.