The ability of an economic agent to reduce risk by holding a number of securities in a portfolio is called:

Question

Quizplus · Accepted Answer

Diversification is the practice of spreading investments among a number of different securities to reduce the risk of any one investment or group of investments. This allows economic agents to minimize the impact of any one security on their overall portfolio and potentially earn higher returns over the long run.

The Ability of an Economic Agent to Reduce Risk by Holding