Which of the following would not be an example of random diversification?
A) Throwing darts at the stock listings to select a portfolio of stocks.
B) Purchasing whichever stocks were recommended by the expert on a financial program.
C) Stocks selected from asking all of your friends their favorite stock and then putting together a portfolio from them.
D) A portfolio recommended by your financial planner, which includes a variety of different investments and stocks from various industries, countries, and company sizes.

Question

Quizplus · Accepted Answer

Random diversification refers to the process of selecting investments in a random or non-systematic manner, without using professional analysis or strategic planning. Choices A, B, and C all describe methods of selecting stocks that do not rely on thorough analysis or strategic planning, thus fitting the concept of random diversification. Choice D, however, describes a portfolio that is carefully curated by a financial planner to include a diverse range of investments across different industries, countries, and company sizes, indicating a strategic and analytical approach rather than a random one.

Which of the Following Would Not Be an Example of Random