Diversification is the principle of:
A)Eliminating risk
B)Reducing the risk we carry to just two
C)Holding more than one risk at a time
D)Eliminating investments from our portfolio that have idiosyncratic risk

Question

Quizplus · Accepted Answer

Diversification is the principle of holding more than one risk at a time in order to reduce overall risk. This is accomplished by investing in a variety of different assets or securities, with the goal of minimizing the impact of any one investment's performance on the overall portfolio. By spreading risk across multiple investments, diversification helps to reduce the potential for losses due to the unforeseen events that can affect a single investment.

Diversification Is the Principle Of