Melanie was just hired as the risk manager of JKL Company.The company president asked her to make a thorough review of all of the company's loss exposures.Melanie noted that many employees were too heavily invested in stock issued by the company in their 401-k plan.Melanie suggested that the employees change some of their investment holdings to mutual funds that invest in stock issued by different companies.The risk control method that Melanie suggested is
A)risk avoidance.
B)duplication.
C)diversification.
D)separation.

Question

Quizplus · Accepted Answer

Melanie suggested diversification, which is a risk control method that involves spreading out investments to reduce the impact of any one loss. By suggesting that employees invest in mutual funds that include stock from different companies, she is reducing their exposure to the risk of holding too much stock in a single company.

Melanie Was Just Hired as the Risk Manager of JKL