Diversification involves:
A) investing all your money in one company.
B) investing all your money in the same type of financial assets, with the same amount of risk.
C) investing all your money in a variety of financial assets, with varying amounts of risk.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

Diversification involves investing your money in a variety of financial assets with varying amounts of risk. This helps to spread out and reduce the overall risk of the portfolio. Investing all your money in one company or the same type of financial asset with the same amount of risk increases the vulnerability to a significant loss. Therefore, the best choice is C.

Diversification Involves