If a person wants a well-diversified portfolio, they should
A) invest within no more than two or three industries.
B) invest in only high expected return investments.
C) invest globally.
D) invest only in Canada.

Question

Quizplus · Accepted Answer

Investing globally can provide a well-diversified portfolio because different countries and regions may experience different economic cycles and market conditions. This can help balance out the risks and returns of the portfolio. Investing in no more than two or three industries (option A) could leave the portfolio vulnerable to downturns in those industries, while investing only in high expected return investments (option B) may increase the overall risk of the portfolio. Investing only in Canada (option D) would limit the diversification potential of the portfolio.

If a Person Wants a Well-Diversified Portfolio, They Should