How does the principle of diversification work?
What will be an ideal response?
Answer: Diversification eliminates risk by investing in different assets instead of one. It works by allowing the extreme good and bad returns to cancel each other out. The result is that total variability or risk is reduced without affecting expected return.
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Positive gaps in perceived service quality are essential for obtaining long-term sustainability
Indicate whether the statement is true or false
On the balance sheet, treasury stock owned by the company is classified properly as
a. contra-stockholders' equity. b. current assets. c. investments. d. a note to the financial statements.
Gamma Company and Chi Company are similar and similar-sized companies operating in the same industry. At the end of the most recent year, Gamma's price-earnings ratio was 22.0, and Chi's price-earnings ratio was 14.2. What conclusion would you draw based on the difference in price-earnings ratios for the two companies?
What will be an ideal response?
Which of the following statements about ocean marine insurance is true?
A) The coverage is narrow and excludes perils of the sea. B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship. C) Protection and indemnity (P&I) insurance covers the shipper of goods for cargo losses. D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.