Why is portfolio diversification important in mutual fund investing? Option: "To eliminate investment risk", "To maximize short-term profits", "To guarantee high returns", "To spread risk across different assets"

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Why is portfolio diversification important in mutual fund investing?

"To eliminate investment risk"

"To maximize short-term profits"

"To guarantee high returns"

"To spread risk across different assets"

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Why is diversifying investments important?

"To maximize returns in a single financial instrument"

"To guarantee a profit in all investments"

"To avoid the need for an emergency fund"

"To spread risk across different asset classes"

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What is the primary reason investors diversify their portfolios?

To maximize short-term gains

To reduce the risk associated with holding only one type of asset

To guarantee profits

To eliminate all investment risk

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What is the primary reason investors diversify their investments across multiple mutual funds?

"To guarantee a fixed return on investment"

"To mitigate risk and enhance potential returns"

"To avoid paying taxes on investment gains"

"To solely support socially responsible companies"

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

"Predicting future market fluctuations accurately"

"Ensuring a consistent monthly income"

"Reducing the overall risk of your portfolio"

"Eliminating the need for financial advisors"

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What is the primary role of diversification in building a mutual fund portfolio?

"To eliminate the need for financial advisors"

"To spread risk across various assets, sectors, and geographies"

"To guarantee a fixed return on investment"

"To solely invest in socially responsible funds"