Which of the Following Leads to the Diversification of Risk

question 7

Multiple Choice

Which of the following leads to the diversification of risk?

• A)Investing in assets that give the highest possible returns
• B)Investing in safe assets that may give low returns
• C)Investing in multiple assets rather than a single asset
• D)Investing in assets that are highly risky but give high returns

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.