Question: How does diversification help with independent risk?

How does diversification help with independent risk?

Step by Step Solution

★★★★★

3.47 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

The averaging out of risks in a large po... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Corporate Finance Core Principles Questions!

Q:

How does diversification reduce risk?

Q:

1. Why is diversification important? How is diversification achieved? 2. Solely on the basis of diversification, is there an argument for selling any of the stocks? In addition to risk reduction...

Q:

1. Calculating alpha values, explain if you agree or disagree with Bushkins selection. 2. Should the information Bart has heard about Alphas new product be a concern in his selection? Explain. 3....

Q:

How does diversification help with independent risk?

Q:

In finance terms, what is risk? How does risk impact investor behavior and shape the expected return an investor might have for a particular security? How does diversification help deal with risk? Be...

Q:

In finance terms, what is risk? How does risk impact investor behavior and shape the expected return an investor might have for a particular security? How does diversification help deal with risk? Be...

Q:

Explain the concept of diversification in investment portfolios. How does diversification help investors manage risk and improve potential returns?

Q:

Watch the movie 'Margin Call' and answer any 2 So, there's three questions questions from 18 and to be answered. answer question 9. 1. Describe the main characters in Margin Call and their respective...

Q:

How does diversification help lower portfolio risk? Briefly explain how correlation influences the diversification benefit?

Q:

Describe the concept of diversification in investment portfolios. How does diversification help in managing risk?

Q:

Determine the value or values of ar for which the tangent to f is horizontal by first finding the derivative of f with respect to then solving f'(x)=0 for a PART 1. f(x) z +4 (2)-1 NOTE: for this...

Q:

What is the main ideas/ouline for The third Phillipc, or third speech of M.T. Cicero against Marcus Antonius.

Q:

Machine Learning ( Regression Models ) Instructions: Write step - by - step Python code to perform all data preparation you may consider relevant for the given dataset; you must perform: - An...

Q:

2. How can the idea of dissonance help us understand how creative methods may enable different forms of knowing about organizational experience to emerge that were previously hidden from view?

Q:

You have just purchased a car and taken out a $50,000 loan. The loan has a five-year term with monthly payments and an APR of 6%. a. How much will you pay in interest, and how much will you pay in...

Q:

You have an outstanding student loan with required payments of $500 per month for the next four years. The interest rate on the loan is 9% APR (monthly). You are considering making an extra payment...

Q:

You have an outstanding student loan with required payments of $500 per month for the next four years. The interest rate on the loan is 9% APR (monthly). You are considering making an extra payment...

Q:

The mean height of an adult giraffe is 19 feet. Suppose that the distribution is normally distributed with standard deviation 0.9 feet. Let X be the height of a randomly selected adult giraffe. Round...

Q:

At December 31, 2012, Percheron Inc. had a deferred tax asset of $30,000. At December 31, 2013, the deferred tax asset is $59,000. The corporation's 2013 current tax expense is $61,000. What amount...

Q:

Question 1 You are negotiating to make a 10-year loan of $35,000 to "ABC" Company. According to the agreement "ABC" Company will pay the loan in the following manner: 1. $2,500 at the end of Year 1,...