Asked by: Dmitrijs Mitskevich
business and finance financial industry

Which of the following is an advantage of diversification?

Last Updated: 29th June, 2020

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.

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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.
  • Commodities.

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What is the purpose of diversification?

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What is the diversification rule?

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What is integration strategy?

? Integration Strategy also called Management Control Strategy . ? Integration strategies allow a firm to gain control over distributors, suppliers, and/or competitors.

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Is diversification a good strategy?

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What is the risk of diversification?

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What are the challenges of diversification?

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  • Reduces Quality. There are only so many quality companies and even less that are priced at levels that provide a margin of safety.
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  • Indexing.
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  • Below Average Returns.
  • Bad Investment Vehicles.
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What are the benefits of diversification of business?

  • Diversification. A company can diversify in several ways, including acquiring a new business, adding a new market segment or selling new products or services.
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What is an advantage of unrelated diversification?

Advantages: The unrelated diversification which is carefully developed and undertaken only after thorough analysis of the environment and the company´s own resources usually brings very good financial results. However, in all cases it should be a low risk investment with a potential for high returns.

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What is concentric diversification?

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What are the advantages and disadvantages of selling a combination of stocks and bonds?

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How can companies benefit from related diversification?

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How does diversification positively and negatively affect risk?

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Why is diversification important to have in investments quizlet?

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