What is meant by diversifying an investment portfolio? What are the advantages of diversification?

What will be an ideal response?


Diversification means that investors spread their investment across more than one asset. Diversification allows investors to reduce risk as individual assets are hit by different economic shocks. Putting a little bit of money in all of these different investment baskets reduces exposure to any single shock.
A-head: DIVERSIFICATION
Concept: Diversification

Economics

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Economics

Contrast positive and normative economics. How can economists carry out normative analysis?

What will be an ideal response?

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If the value of the U.S. dollar changes from 1.4 euros to 1.2 euros, we would expect that the United States would experience a ________ in exports and a ________ in imports.

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Economics