What is the principal advantage of diversification in the context of asset allocation? Option: Mitigated risk, Guaranteed returns, Amplified risk, Diminished returns

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What is the principal advantage of diversification in the context of asset allocation?

Mitigated risk

Guaranteed returns

Amplified risk

Diminished returns

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Why is diversification considered a crucial principle in investment management?

It helps mitigate risk by avoiding overexposure to any single asset

It guarantees superior returns compared to concentrated investments

It elevates the overall risk level, potentially leading to higher gains

It adds complexity to the investment process, requiring more expertise

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What is the key benefit of diversifying your investments across different asset classes?

"Reducing the overall risk of your portfolio"

"Ensuring a consistent monthly income"

"Predicting future market fluctuations accurately"

"Eliminating the need for financial advisors"

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What is the key benefit of diversifying an investment portfolio across different asset classes?

"Eliminating the risk of investment losses."

"Predicting which asset class will perform best."

"Mitigating risk by spreading investments across assets with varying performance patterns."

"Guaranteeing the highest returns in all market conditions."

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What is the primary benefit of diversification in investment?

"Reducing risk"

"Guaranteeing against losses"

"Predicting market trends"

"Maximizing short-term profits"

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What is the core benefit of a diversified investment approach?

Simplified investment management

Elevated potential for superior returns

Reduced transaction expenses

Diminished overall portfolio volatility