Diversification benefits an investor by
A) increasing wealth.
B) increasing expected return.
C) reducing risk.
D) increasing liquidity.

Question

Quizplus · Accepted Answer

Diversification reduces risk by spreading investments across different asset classes or securities, which can help to offset losses in one area with gains in another. While diversification may also impact wealth and expected returns, its primary benefit is risk reduction. Liquidity is not directly impacted by diversification.

Diversification Benefits an Investor by