The Principle of Diversification Tells Us That

question 15

Multiple Choice

The principle of diversification tells us that:

• A)there is no risk in investing in a portfolio of shares
• B)spreading your investment across many assets will eliminate some risk
• C)all risk can be eliminated
• D)unsystematic risk cannot be reduced
• E)systematic risk can always be eliminated by diversification

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Definitions:

Variance

The difference between planned, budgeted, or standard amounts and actual amounts in accounting and statistics.

July

The seventh month of the year in the Gregorian calendar.

Direct Labor Cost

The wages paid to workers directly involved in producing a product or delivering a service.

Estimated

Approximately calculated or approximated based on available information.