Diversification in one's investments reduces:

Question

Quizplus · Accepted Answer

Diversification is the strategy of investing in a variety of assets to spread out risk. By holding a diversified portfolio, an investor reduces the risk of losses due to the poor performance of a single asset or a small number of assets. This type of risk is known as idiosyncratic risk and can be mitigated by diversification. Therefore, diversification reduces idiosyncratic risk, but does not necessarily reduce pooling risk, systemic risk or time preference risk.

Diversification in One's Investments Reduces