Suppose that you own $10,000 worth of stock in General Motors.Adding stock in which of the following companies would be least likely to reduce the risk in your portfolio?
A) Google
B) Walmart
C) Ford
D) General Electric

Question

Quizplus · Accepted Answer

Adding stock in Ford would be least likely to reduce the risk in your portfolio because Ford operates in the same industry as General Motors. Diversification reduces risk by investing in assets that are not closely correlated. Since both Ford and General Motors are major players in the automotive industry, their stock prices are likely to be influenced by similar economic factors, market trends, and industry-specific risks.

Suppose That You Own $10,000 Worth of Stock in General