Reducing risk by combining a large number of small risks whose outcomes are not closely related is called:

Question

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Diversification is the process of spreading out one's investments to reduce risk. By combining a large number of small risks whose outcomes are not closely related, investors can reduce the likelihood of losing everything if one investment performs poorly. This approach can help to protect against market fluctuations, industry-specific risks, and other unexpected events that can negatively impact the value of investments.

Reducing Risk by Combining a Large Number of Small Risks