Which one of the following statements is true?
A)Investors should put all of their "eggs in one basket."
B)Individuals can ignore their tolerance for risk when selecting specific investments.
C)Diversification is one way to increase your risk.
D)The amount of time a specific investment has to work is an important factor when managing an investment.
E)Younger investors tend to invest a large percentage of their portfolio in conservative investments.

Question

Quizplus · Accepted Answer

Diversification is a strategy aimed at reducing risk by spreading investments across various financial instruments, industries, and other categories. It aims to maximize returns by investing in different areas that would each react differently to the same event. Although no investment strategy can guarantee against loss, diversification is the most important component in reaching long-range financial goals while minimizing risk. The statement about younger investors tending to invest a large percentage in conservative investments is generally false; younger investors often have a longer time horizon and can therefore take on more risk for potentially greater returns. The importance of considering the amount of time an investment has to grow is crucial in managing investments, as it can influence the types of investments chosen and the level of risk that is acceptable.

Which One of the Following Statements Is True