ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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putting all your money in the lowest risk investment possible.
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purchasing speculative investments.
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loaning your money to the government.
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investing in multiple different investments.
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Detailed explanation-1: -Diversification is a strategy that mixes a wide variety of investments within a portfolio in an attempt to reduce portfolio risk. Diversification is most often done by investing in different asset classes such as stocks, bonds, real estate, or cryptocurrency.
Detailed explanation-2: -Diversification is the practice of spreading your investments around so that your exposure to any one type of asset is limited. This practice is designed to help reduce the volatility of your portfolio over time.
Detailed explanation-3: -Consider Index or Bond Funds Investing in securities that track various indexes makes a wonderful long-term diversification investment for your portfolio. By adding some fixed-income solutions, you are further hedging your portfolio against market volatility and uncertainty.
Detailed explanation-4: -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-5: -What Is Diversification? The idea of diversification is to create a portfolio that includes multiple investments in order to reduce risk.