Diversification means
A)Buying a large amount of shares in one company
B)Buying a large amount of shares in several companies within the same industry
C)Buying all the shares of any one company
D)Buying shares in different companies in different industries
E)Buy a small amount of share in one company

Question

Quizplus · Accepted Answer

Diversification means spreading your investments across different companies in different industries to minimize risk. Therefore, buying shares in different companies in different industries is the best option for diversification. A, B, and E do not achieve diversification as they focus on one or a few companies in the same industry. C is not practical as it is unlikely to buy all shares of any one company.

Diversification Means