ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It protects against risk
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It is a strategy of having many different types of investments.
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You will not lose any money with this strategy.
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You will have a mix of risky and safe investments.
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Detailed explanation-1: -avoid investing solely in individual stocks. Many financial advisors recommend that investors diversify their investment portfolio. Which of the following is NOT true about a diverse investment strategy? you will have a mix of risky and safe investments.
Detailed explanation-2: -Which of the following is NOT true about a diverse investment strategy? You will not lose any money with this strategy.
Detailed explanation-3: -Answer and Explanation: The answer is C). The idea behind diversification is that by adding stocks with different risk characteristics, investors could reduce exposure to idiosyncratic risks.
Detailed explanation-4: -Diversification involves spreading your investment dollars among different types of assets to help temper market volatility. By “smoothing out” market performance, you may be more likely to maintain a long-term portfolio position, potentially improving your chances of meeting key investment goals.
Detailed explanation-5: -Short-term certificates of deposit. Money market funds. Treasury bills, notes, bonds and TIPS. Corporate bonds.