The reduction in risk realized when a portfolio is invested in a variety of assets is called
A) Stock selection
B) Diversification
C) Correlation
D) Stock management
E) Opportunity investing

Question

Quizplus · Accepted Answer

Diversification is the practice of investing in a variety of assets to reduce risk. By spreading the investment across different asset classes, industries, and geographies, the investor lowers the risk of losing all their investment due to the performance of one specific asset. This strategy allows the risk to be mitigated across the portfolio as a whole.

The Reduction in Risk Realized When a Portfolio Is Invested