9 Questions
What is diversification?
Reducing the chance of loss by spreading the loss exposure across different parties, securities, or transactions
How can relying on a single supplier be risky?
The supplier may go out of business
Why is it risky for a grain farmer to sell the entire harvest at one time?
Grain prices may fluctuate
What does diversification refer to?
Spreading loss exposure across different parties, securities, or transactions
What is an example of how having different customers and suppliers reduces risk?
Sales are impacted adversely by a domestic recession
How can a grain farmer minimize risk when selling their harvest?
Sell 9,000 bushels each quarter or 3,000 bushels each month
Reducing risk by diversifying across different parties and suppliers is known as ______
diversification
Investment risk can be reduced by holding different ______
assets
Selling a harvest in smaller quantities over time is an example of diversifying ______
transactions
"Test Your Knowledge on Diversification: Reduce Risk and Maximize Gains!" Take this quiz to learn more about the importance of diversification in reducing the risk of loss and maximizing gains. Learn about spreading exposure across different parties, securities, and transactions. Challenge yourself to identify the benefits of diversification and understand how it can help you navigate through market volatility. Perfect for investors and finance enthusiasts looking to expand their knowledge!
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