Diversification:
A) is the process by which risks are shared among many different assets or people.
B) makes a market more liquid by having intermediaries ready to buy or sell any asset.
C) is the interest rate at which one would lend if there were no risk of default.
D) occurs when a borrower fails to pay back a loan according to the agreed-upon terms.

Question

Quizplus · Accepted Answer

Diversification is a risk management technique that involves spreading investments across different assets or people to reduce the overall risk of a portfolio. By diversifying, investors can decrease their exposure to any one particular asset or market, and potentially increase their returns over the long-term.