Question: In your own words, explain why diversification can help lower the risk of a portfolio of assets.

In your own words, explain why diversification can help lower the risk of a portfolio of assets.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock 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 Finance Questions!

Q:

The following Balance Sheet extract relates to the Snapple Company: Bonds payable $1,000,000 Common Stock $3,000,000 Preferred Stock $2,000,000 Additional Information: The bonds are 8%, annual coupon...

Q:

1. Assume stocks A and B have had identical stock prices every day for the past three years. Stock A pays a dividend but Stock B does not. Which one of these statements applies to these stocks for...

Q:

10. Which of the following is/are true about portfolio diversification? A. You can diversify away almost all of a portfolio's specific risk (or unsystematic risk) but can't get rid of systematic risk...

Q:

I need the answers and explanation/work to Chapter 9 review questions 1-10. Chapter 8 Overview A key principle explained in this chapter is that with appropriate diversification, an investor can...

Q:

Which of the following is/are true about portfolio diversification ? You can diversify away almost all of a portfolio's specific risk (or unsystematic risk) but can't get rid of systematic risk ( or...

Q:

10. Which of the following is/are true about portfolio diversification? A. You can diversify away almost all of a portfolio's specific risk (or unsystematic risk) but can't get rid of systematic risk...

Q:

CoursHeroTranscribedText: A 5-year loan in the amount of $48,000 is to be repaid in equal annual payments. What is the remaining principal balance after the third payment if the interest rate is 5...

Q:

Fundamentals of Finance and Banking DFAIDDSY [1] @estion 1 SECTION A ANSWER ALL QUESTIONS. 1. Which of the following has the largest future value if Rs] ,000 is invested today? A. B. C. D. E. Five...

Q:

The case (1 page max) Present the background of the case. Introduce the client and her/his profile. Specific details can be given in the IPS. Investor: Justin Trudeau Advisor: Tony Stark Investors...

Q:

Suppose that you only want to invest in technology stocks. Assume all risky technology stocks have a standard deviation of 40% and all pairs of risky technology assets have a correlation coefficient...

Q:

Show all steps and explainplease. 3. If the energy of a photon is 1.3210-18 J, what is its wavelength in nm? OA. 1.5110-7 nm B. 151 nm OC. 1.99x1015 nm D. 1.99x1024 nm E. 6.64x10- nm

Q:

In June 2013, HJ Heinz Co. (HNZ) had a share price of $72.36, a market-to-book ratio of 7.66, a book value of $4,984 million, and a cash value of $1,100.7 million. What was Heinz's market...

Q:

The strength of a currency reflects the financialperceivedhistoricalactual strength of that country's economy and its future prospects.

Q:

What is a key component of a data governance framework? Question 7 Answer a . Ignoring regulatory compliance b . Defining policies and standards for data management c . Centralizing all data in one...

Q:

=+For all media we think in press releases. We write press releases for the big idea. What's the press going to write about?

Q:

=+5. Become an avid observer Pay attention to TV commercials you love. Why do you love them? What visual or verbal techniques could you borrow?

Q:

=+6. Become a collector Save great examples of promotional messages wherever you find them. Use your cell phone to snap a photo. Print out creative work from agency websites. Keep great brochures...