Which of the following is a true statement about diversification?
A) It will increase your overall risk.
B) It will increase your volatility.
C) It will decrease the number of investments in your portfolio.
D) It will increase your chances of obtaining your financial goals.

Question

Quizplus · Accepted Answer

Diversification helps to spread out the risk by investing in a variety of different assets rather than a single one. By doing so, it minimizes the impact of any one investment on the overall portfolio, thus decreasing the risk while still potentially achieving one's financial goals.

Which of the Following Is a True Statement About Diversification