Answer the Following

question 25

Essay

Answer the following:
a)How is insurance similar to an individual's diversified portfolio?
b)Explain why holding a diverse portfolio of assets is important to minimizing the risk of an investment portfolio.
c)Given the importance of diversifying all of your financial assets,is it a good idea to own stock in the company for which you work,even if you own stock in other sectors? Explain why or why not.
d)A home is the most valuable asset for a majority of U.S.residents.Why do we not see more diversification in real estate ownership against loss of value due to market fluctuations?

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Definitions:

Marginal Resource Cost

The added expenditure for making one more unit of a product or service.

Profit-Maximizing

The process or strategy undertaken by a firm to achieve the highest possible profit from its operations, considering factors like pricing, production, and cost management.

Labor Demand Curve

A downward-sloping curve that represents how the quantity of labor demanded by employers changes as the wage rate changes.

Purely Competitive

Purely competitive markets are those in which numerous small firms compete against each other, and the price of goods or services is determined by the market with no single participant having significant control over it.