What lesson can be learned from the 2008 market decline?
A)Stocks and bonds react similarly in downward markets.
B)Diversification lowers risk.
C)Market declines cause high inflation rates.
D)Global markets all react exactly the same.
E)Equity risk premiums will decline in the future.

Question

Quizplus · Accepted Answer

The 2008 market decline demonstrated the importance of diversification in managing risk. A well-diversified portfolio can help mitigate losses during a market downturn by spreading investments across multiple asset classes and sectors. This lesson has been reinforced by subsequent market declines, further highlighting the value of diversification.

What Lesson Can Be Learned from the 2008 Market Decline