The Fundamental Principle in the Investment Environment, Which States That

question 30

Multiple Choice

The fundamental principle in the investment environment, which states that securities with various degrees of risk combined into a portfolio result in portfolios with lower levels of total risk, is known as

• A) fragmentation
• B) the efficient frontier
• C) the investor's paradox
• D) diversification

---

Definitions:

Equilibrium Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded in the market.

Northern Minnesota

A geographical region in the U.S. state of Minnesota, known for its natural beauty and outdoor activities.

Southern Canada

The region of Canada located closest to the United States border, characterized by its populous cities, milder climate, and economic hubs.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.