What is the primary goal of diversification in investment?

"Minimizing investment risks" "Maximizing short-term profits" "Predicting market fluctuations" "Eliminating investment losses entirely"

Which of the following is NOT mentioned as a component of diversification?

"Bonds" "Cryptocurrencies" "Real Estate Funds" "International Stocks"

How does diversification reduce the impact of market volatility on an investment portfolio?

"By concentrating investments in a single, stable asset class" "By spreading investments across different asset classes and sectors" "By timing the market to buy low and sell high" "By relying solely on high-risk, high-reward investments"

What advantage does diversification offer in terms of monitoring investments?

"It eliminates the need for monitoring investments" "It requires constant, daily monitoring of market fluctuations" "It reduces the time and effort needed for monitoring investments" "It necessitates hiring a professional financial advisor for monitoring"

According to the text, what is a key benefit of diversifying into mutual funds?

"Guaranteed returns regardless of market conditions" "Access to both debt and equity investments" "Elimination of all investment risks" "Fixed interest rates higher than traditional savings accounts"

How does diversification contribute to capital preservation?

"By ensuring all investments are in low-risk assets" "By allocating some investments to lower-risk options" "By relying solely on fixed-income securities" "By avoiding investments in the stock market entirely"

What is the primary psychological benefit of a diversified investment portfolio?

"Increased risk tolerance" "Reduced financial anxiety" "Greater market predictability" "Elimination of investment losses"