The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2

-An investor who wants to diversify his portfolio will buy only bonds when both stocks and bonds are expected to yield better returns.

Question

The figure given below shows the demand [D and D'] and supply [S and S'] curves of shares of stock.Figure 17.2
 
-An investor who wants to diversify his portfolio will buy only bonds when both stocks and bonds are expected to yield better returns.

Quizplus · Accepted Answer

The statement is false. An investor who wants to diversify their portfolio will typically buy both stocks and bonds, regardless of which one is expected to have better returns. The idea is to spread out the investment risk across different types of assets.

The Figure Given Below Shows the Demand [D and D']