Investors often hold ________ to reduce risk associated with investments.

Question

Quizplus · Accepted Answer

Investors often hold diversified portfolios to reduce risk associated with investments. Holding a diversified portfolio means investing in a variety of assets such as stocks, bonds, real estate, and commodities to spread and reduce risk. This allows an investor to minimize the impact of negative events that may affect a particular asset or sector. Holding only domestic currency contracts, letters of credit, or forward contracts would not provide the same level of risk reduction as a diversified portfolio.

Investors Often Hold ________ to Reduce Risk Associated with Investments