An individual can reduce financial risk by diversifying investments, that is, by investing in several assets whose possible losses are independent events.

Question

Quizplus · Accepted Answer

By diversifying investments, an individual can spread out their risk across several assets, which helps to lower overall risk. This strategy works because the likelihood of all the investments losing value at the same time is low, and any losses in one asset can be offset by gains in another.

An Individual Can Reduce Financial Risk by Diversifying Investments, That