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Homework answers / question archive / Diversification is an important concept in characterizing risk and return
Diversification is an important concept in characterizing risk and return. Which of the following best defines what diversification is? The process of putting money in different types of investments for the purpose of reducing the overall risk of the portfolio The process of selecting different investments with the strongest correlation for the purpose of maximixing returns in the portfoio O The process of selecting the right mix between risk-free and risky assets The process of analyzing historical average returns for different investments. O
Diversification means investing available investable funds in various available investment opportunities with distinct characters and risk and return to minimize risk and maximise return.
Hence, correct option is first option
