“Don’t put all your eggs in one basket.” Interpret in terms of economic concepts.
What will be an ideal response?
This statement emphasizes the concept that risk can be reduced by investing in a diverse portfolio. Diversification allows an investor to mitigate the risk of holding one kind of asset by holding other kinds of assets that may perform well even though the other is performing poorly. Thus, the overall risk of the portfolio is reduced as the chances of all assets simultaneously failing is relatively low.
You might also like to view...
Consumer spending is spending by ________ households on final goods and services produced ________
A) domestic; domestically and abroad B) domestic; domestically C) domestic and foreign; domestically and abroad D) domestic and foreign; domestically
The incentive structure is a
A) system of rewards and punishments that individuals consider when making decisions. B) system determined by the federal government that gives certain states more federal funds. C) system of infrastructure in the United States that improves commerce. D) system of checks and balances in the government.