Reducing risk through the purchase of assets whose returns do not always move together is
A)diversification.
B)intermediation.
C)intervention.
D)discounting.

Question

Quizplus · Accepted Answer

Diversification is the strategy of reducing risk by investing in a variety of assets that do not have a high correlation with one another. This helps to reduce the impact of any one asset or market on the overall portfolio. Intermediation refers to the process of using intermediaries such as banks or brokers to facilitate transactions. Intervention refers to the act of an external party, such as a government or central bank, taking action to influence the economy or financial markets. Discounting refers to the process of determining the present value of future cash flows.

Reducing Risk Through the Purchase of Assets Whose Returns Do