Diversification refers to
A)choosing assets so as to maximize expected return.
B)choosing assets so as to minimize tax liability.
C)choosing assets so as to maximize liquidity.
D)allocating savings among different assets.

Question

Quizplus · Accepted Answer

Diversification means allocating savings among different assets to reduce risk. This helps to avoid putting all your eggs in one basket and spread out potential losses. Choosing assets based on expected return or liquidity may not necessarily lead to a diversified portfolio. Minimizing tax liability is a separate concern and may not necessarily be the primary goal of diversification.

Diversification Refers to