Asked by: Dmitrijs Mitskevichbusiness and finance financial industry
Which of the following is an advantage of diversification?
Last Updated: 29th June, 2020
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Accordingly, what are the advantages of diversification?
Three key advantages of diversification include: Minimising risk of loss – if one investment performs poorly over a certain period, other investments may perform better over that same period, reducing the potential losses of your investment portfolio from concentrating all your capital under one type of investment.
what are the benefits of a well diversified portfolio quizlet? The benefits of diversification are that of adding more stocks. Diversification shows that unsystematic risk falls as we add more stocks, but systematic risk is the lower boundary, and we cannot eliminate it, no matter how many stocks we add to our portfolio.
In this manner, what are the major advantages and disadvantages of diversification?
Disadvantages Of Diversification However, a diversified entity will lose out due to having limited investment in the specific segment. Therefore, diversification limits the growth opportunities for an entity. Diversifying into a new market segment will demand new skill sets.
Which of the following investments are included in a diversified portfolio?
Include These Six Asset Classes to Diversify Your Portfolio
- U.S. stocks. Different sized companies should be included.
- U.S. fixed income. The safest are U.S. Treasurys and savings bonds.
- Foreign stocks. These include companies from both developed and emerging markets.
- Foreign fixed income.