Making an investment in an exchange-traded fund is more risky than buying the common shares of just one company.

Question

Quizplus · Accepted Answer

Investing in an exchange-traded fund (ETF) can actually be less risky than buying the common shares of just one company. ETFs offer diversification by investing in a basket of different assets and companies, spreading the risk across the entire portfolio. On the other hand, buying a single company's shares exposes an investor to significant risk specific to that one company.

Making an Investment in an Exchange-Traded Fund Is More Risky