The Purpose of Diversification Is

question 37

Multiple Choice

The purpose of diversification is:

• A) To capture more consumers
• B) To satisfy the mission and vision
• C) To build a portfolio of businesses much like a portfolio of stock
• D) To spread out risk and opportunities over a larger set of businesses

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Definitions:

Total Return

The complete return on an investment over a specified period, including both capital gains and income received.

Dividend

A portion of a company's earnings that is paid to shareholders or owners as a distribution of profits.

Capital Gains Rate

The tax rate applied to the profit made from selling an asset at a higher price than its purchase price.

Insider Trading

The trading of a public company's stock or other securities by individuals with access to nonpublic, material information about the company.