Does Diversification Always Reduce the Overall Risk

question 90

Essay

Does diversification always reduce the overall risk?

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Definitions:

Nonrivalry

A characteristic of a good or service whereby its consumption by one individual does not reduce its availability for consumption by others.

Nonexcludability

The inability to keep nonpayers (free riders) from obtaining benefits from a certain good; a characteristic of a public good.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available to all members of society and one person's consumption does not reduce availability for others.

Public Good

A good or service offered to every member of a society for free, supplied by either government entities or private individuals or groups, without seeking financial gain.