Discuss risk reduction through diversification

What will be an ideal response?


Diversification reduces risk by not putting all of one's eggs in one basket, but instead spreading them across multiple baskets. By doing this, an unfavorable event, in this case dropping a basket, will not lead to all of the eggs being broken, but only one. Hence risk is being reduced since a large loss will be less likely to occur.

Business

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State Bank offers to lend money to Rodeo Promotions, Inc., at 15 percent interest. Before Rodeo accepts, a statute is enacted prohibiting loans at interest rates greater than 12 percent. Rodeo and the bank have

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Business