This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: What is meant by diversifying an investment portfolio? What are the advantages of diversification? ... (Read 116 times)

storky111

  • Hero Member
  • *****
  • Posts: 561
on: Jun 29, 2018
What is meant by diversifying an investment portfolio? What are the advantages of diversification?
 
  What will be an ideal response?

Question 2

If the economy were truly made of industries that fit the textbook definition of perfect competition what do you expect would be a major disadvantage of this from the consumer's perspective?
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Tonyam972

  • Sr. Member
  • ****
  • Posts: 342
Reply #1 on: Jun 29, 2018
Answer to Question 1

Diversification means that investors spread their investment across more than one asset. Diversification allows investors to reduce risk as individual assets are hit by different economic shocks. Putting a little bit of money in all of these different investment baskets reduces exposure to any single shock.
A-head: DIVERSIFICATION
Concept: Diversification

Answer to Question 2

One of the assumptions of perfect competition is that the products are all homogeneous. This would clearly reduce product variety across industries and eliminate consumer choice.


storky111

  • Hero Member
  • *****
  • Posts: 561
Reply #2 on: Jun 29, 2018
Thank you :)


Tonyam972

  • Sr. Member
  • ****
  • Posts: 342
Reply #3 on: Jun 29, 2018
Happy to help you


« previous next »
 

Did you know?

In ancient Rome, many of the richer people in the population had lead-induced gout. The reason for this is unclear. Lead poisoning has also been linked to madness.

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

Did you know?

Asthma occurs in one in 11 children and in one in 12 adults. African Americans and Latinos have a higher risk for developing asthma than other groups.

Did you know?

Addicts to opiates often avoid treatment because they are afraid of withdrawal. Though unpleasant, with proper management, withdrawal is rarely fatal and passes relatively quickly.

Routes of Drug Administration: Advantages and Disadvantages Routes of Drug Administration: Advantages and Disadvantages
Routes of Drug Administration: Advantages and Disadvantages Routes of Drug Administration: Advantages and Disadvantages
Reaction 1: The First ATP Investment Reaction 1: The First ATP Investment
Effect of Increasing the Investment Rate on the Steady State Effect of Increasing the Investment Rate on the Steady State
Advantages of Observational Method Advantages of Observational Method
A portfolio earned -13%, 18%, 5%, 24%, and -5% in five successive years. What was the ... A portfolio earned -13%, 18%, 5%, 24%, and -5% in five successive years. What was the ...
Video: Gastrin (gastric emptying) & Secretin (buffering gastric acid)

For a complete list of videos, visit our video library