Question content area

Part $1$

Diversification.$$Why is it important to diversify your financial holdings across financial$$ assets? How does asset allocation enable you to accomplish$$ diversification?

Part $2$

$$Diversification:$($Select the best answer$$ below.$)$

A$.$

benefits are significant because most funds move in the same direction as the market.

B$.$

benefits are important because most funds do not necessarily move in the same direction as the market.

C$.$

raises the level of risk in a portfolio.

D$.$

lowers the level of risk in a portfolio.

Part $3$

Asset allocation enables investors to diversify among various financial$$ assets:$($Select the best answer$$ below.$)$

A$.$

that are offered for the same industry.

B$.$

that are of a similar type.

C$.$

where some have lower risk and some have higher risk.

D$.$

that are the same type.