The Primary Purpose of Portfolio Diversification Is To

question 91

Multiple Choice

The primary purpose of portfolio diversification is to:

• A) increase returns and risks.
• B) eliminate all risks.
• C) eliminate asset-specific risk.
• D) eliminate systematic risk.
• E) lower both returns and risks.

---

Definitions:

Consumer Price Index

A measure that determines the average movement over time in the pricing urban shoppers pay for a selected assortment of consumer goods and services.

Producer Price Index

A gauge of economic health that records the mean shift over periods in the sale prices domestic producers earn from their output.

Consumer Price Index

An index measuring the variation in prices paid by typical consumers for retail goods and other items.

Inflation Rate

The swift rise in the average pricing of goods and services, resulting in the erosion of purchasing capabilities.