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Questions and Answers
What is diversification?
What is diversification?
- Selling all assets at once to minimize risk
- Investing in a single stock to maximize returns
- Buying stocks from a single company to minimize investment risk
- Reducing the chance of loss by spreading the loss exposure across different parties, securities, or transactions (correct)
How can relying on a single supplier be risky?
How can relying on a single supplier be risky?
- The supplier may go out of business (correct)
- The supplier may be located in a different country
- The supplier may not deliver on time
- The supplier may not provide high-quality products
Why is it risky for a grain farmer to sell the entire harvest at one time?
Why is it risky for a grain farmer to sell the entire harvest at one time?
- The farmer may not find a buyer
- Grain prices may fluctuate (correct)
- The farmer may not have enough grain to sell
- The farmer may not have enough storage space
What does diversification refer to?
What does diversification refer to?
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What is an example of how having different customers and suppliers reduces risk?
What is an example of how having different customers and suppliers reduces risk?
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How can a grain farmer minimize risk when selling their harvest?
How can a grain farmer minimize risk when selling their harvest?
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Reducing risk by diversifying across different parties and suppliers is known as ______
Reducing risk by diversifying across different parties and suppliers is known as ______
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Investment risk can be reduced by holding different ______
Investment risk can be reduced by holding different ______
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Selling a harvest in smaller quantities over time is an example of diversifying ______
Selling a harvest in smaller quantities over time is an example of diversifying ______
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