Diversification Is the Inclusion of a Number of Different Investments

question 42

True/False

Diversification is the inclusion of a number of different investments in a portfolio with the goal of increasing returns or reducing risk.

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Definitions:

Perfect Competition Environment

A theoretical market structure where all companies sell an identical product, market share does not influence prices, and all participants are price takers in a perfectly competitive market.

Monopoly Environment

A market structure characterized by a single seller, selling a unique product in the market with no close substitutes.

Porter's Five Forces

A framework for analyzing a company's competitive environment by evaluating five forces: competitive rivalry, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitute products or services.

Unattractive Industry

An industry characterized by low profitability, high competition, or significant barriers to entry.