Carlos manages a portfolio composed of many different companies and asset classes such as stocks and bonds, foreign stocks, and bonds and securities in developed and emerging markets. As a result, his portfolio is considered to be
A) globalized.
B) positively correlated.
C) diversified.
D) classified.
E) risky.

Question

Quizplus · Accepted Answer

In this scenario, Carlos's portfolio is diversified, meaning it lacks concentration in any similar security, industry, or country. By diversifying his portfolio with different companies and different asset classes such as stocks and bonds, foreign stocks, and bonds and securities in developed and emerging markets, he is reducing the risk that one bad event will destroy his total investment.

Carlos Manages a Portfolio Composed of Many Different Companies and Asset