What Type of Risk Can Investors Reduce Through Diversification

question 64

Multiple Choice

What type of risk can investors reduce through diversification?

• A) All risk
• B) Systematic risk only
• C) Unsystematic risk only
• D) Uncertainty

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Definitions:

Rate of Return

The increase or decrease in the value of an investment during a set timeframe, presented as a percentage of the investment's original price.

Current Dividends

The amount of money paid to shareholders from a company's current earnings.

Cumulative Voting

A voting system used by corporations allowing shareholders to allocate their entire vote in any proportion to one or more candidates for the board of directors.