Terry Hamilton has just received $22,000 from an uncle who died and is trying to decide how to invest it.She has done some research and has decided that about 30% of the money should go into large cap stocks,20% into medium cap stocks,15% into small cap stocks,10% into bonds,10% into foreign stock,and 15% into cash.She thinks that even if one area does not do that well,the rest will so that her overall return will be pretty good.What aspect of investing is Terry most concerned about?
A)Income
B)Return
C)Diversification
D)Liquidity
E)Investment growth

Question

Quizplus · Accepted Answer

Terry's strategy of spreading her investment across various asset classes (large cap stocks, medium cap stocks, small cap stocks, bonds, foreign stock, and cash) is a classic example of diversification. This approach is used to manage risk by not putting all one's money into a single type of investment.

Terry Hamilton Has Just Received $22,000 from an Uncle Who