Investors Who Wish to Reduce Their Risk Should

question 17

Multiple Choice

Investors who wish to reduce their risk should

• A)buy stocks of small companies.
• B)diversify.
• C)buy stocks of large companies.
• D)keep large amounts of cash.

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Definitions:

Planning Purposes

The use of forecasts, targets, and models to guide strategic decision-making and to set goals for future organizational performance.

Production Costs

Expenses associated with the manufacture of products, including raw materials, labor, and overhead.

Period Cost

Expenses that are not tied to the production process and are therefore expensed in the period they are incurred, such as selling and administrative expenses.

Direct Material

Raw materials that can be directly traced to the manufacturing of a product and are significant in cost.