Risk diversification is based on the principle that:
A) one should not be exposed to only one event
B) one should put all her "eggs in one basket"
C) risk can be measured subjectively
D) pure risk seldom happens

Question

Quizplus · Accepted Answer

Risk diversification is based on the principle that one should not be exposed to only one event. This means that spreading investments across different assets or industries can help reduce overall risk. By diversifying, if one investment performs poorly, it may be offset by another that performs well.

Risk Diversification Is Based on the Principle That