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
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If savers do not have fixed savings goals, the supply curve of loanable funds will generally be
a. horizontal. b. downward sloping. c. vertical. d. upward sloping.
Contrast positive and normative economics. How can economists carry out normative analysis?
What will be an ideal response?
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.
A. rise; rise B. fall; fall C. rise; fall D. fall; rise
The ________ can change the quantity of money in the economy.
A. Treasury Department B. Federal Reserve C. Office of the Comptroller of the Currency D. Congress