An investor can reduce the risk of investing in a particular company's stock by ________.

Question

Quizplus · Accepted Answer

Investing in the stock of other companies in other industries helps to spread out the risk and diversify the investor's portfolio. This way, if one company or industry performs poorly, it will not have a significant impact on the investor's overall portfolio. Buying additional shares of stock in the same company or investing in the stock of other companies in the same industry does not necessarily reduce risk, as the investor's portfolio remains concentrated in a single company or industry. Buying the same company's bonds as well as its stock may provide a fixed income stream, but it does not necessarily reduce the risk of investing in the company's stock.

An Investor Can Reduce the Risk of Investing in a Particular