Diversification Is Important in Your Bond Portfolio Because It _________________

question 2

Multiple Choice

Diversification is important in your bond portfolio because it _________________.

• A) Reduces the effect of default risk
• B) Keeps you from getting bored with your investments
• C) Spreads your wealth
• D) None of the choices are correct; diversification within your bond portfolio is not important

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Definitions:

Linear Relationship

A type of relationship between two variables where the change in one variable is directly proportional to the change in the other variable.

Regression Parameters

The coefficients in a regression equation that represent the relationship between independent variables and a dependent variable.

Standard Error Of Estimate

A measure used in statistics to indicate the accuracy of a prediction or how much sample data deviates from the actual population.

T-Test

A type of statistical test that is used to compare the means of two groups to determine if the differences between them are statistically significant.