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 lesson learned from the 2008 market decline is that diversification lowers risk. During the market decline, certain stocks and asset classes suffered more than others, but by diversifying across multiple asset classes, the overall impact on a portfolio could be minimized. This emphasizes the importance of having a well-diversified portfolio to mitigate risk.

What Lesson Can Be Learned from the 2008 Market Decline