Which of the Following Best Illustrates Diversification

question 81

Multiple Choice

Which of the following best illustrates diversification?

• A)A company that produces many different products decides to produce fewer.
• B)After selling stock, corporate management spends funds on projects with greater risks than shareholders had anticipated.
• C)Instead of holding only the stocks of companies engaged in the banking business, a person decides to hold stock in a number of different companies producing different goods and services.
• D)A person decides to purchase only stocks that have paid high dividends in the past.

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Definitions:

Creditor

An individual or entity to whom money is owed by another party, known as the debtor.

Mortgage

A legal agreement by which a bank or creditor lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Debtor

An entity or person that owes money to another party.

Instrument

A tool or device used for performing specific tasks, often scientific, musical, or technical functions.