Q183
Reduction of risk by holding large number of securities in portfolio of assets is classified as
A.
diversification
AnswerB.
selling ability
C.
reduction ability
D.
director ability
Answer: Option A
Solution
Answer: Option A
Solution:
Reduction of risk by holding large number of securities in portfolio of assets is classified as diversification. A diversified investment is a portfolio of various assets that earns the highest return for the least risk. A typical diversified portfolio has a mixture of stocks, fixed income, and commodities.