ECONOMICS
FINANCIAL MARKETS
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Emergency Fund
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Common Stock
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Diversification
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Dividends
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Detailed explanation-1: -The practice of spreading money among different investments to reduce risk is known as diversification. Diversification is a strategy that can be neatly summed up as “Don’t put all your eggs in one basket.” One way to diversify is to allocate your investments among different kinds of assets.
Detailed explanation-2: -Diversification involves spreading your investment dollars among different types of assets to help temper market volatility. As a simple example, all equity (or stock) investments and most fixed income (or bond) investments are subject to market fluctuation.
Detailed explanation-3: -Diversification is a strategy that aims to mitigate risk and maximize returns by allocating investment funds across different vehicles, industries, companies, and other categories.
Detailed explanation-4: -Diversification is the spreading of your investments both among and within different asset classes. And rebalancing means making regular adjustments to ensure you’re still hitting your target allocation over time. All are important tools in managing investment risk.
Detailed explanation-5: -Diversification is an investing strategy used to manage risk. Rather than concentrate money in a single company, industry, sector or asset class, investors diversify their investments across a range of different companies, industries and asset classes.