Answered

Given the information about the investment types and their percentages, answer the following question:

Which of the following correctly describes the diversity of the portfolio?

A. Not diverse
B. Minimally diverse
C. Somewhat diverse
D. Extremely diverse

Investment Types and Percentages:

- Preferred stock in a company under federal investigation: 8%
- Developing firm: 10%
- Junk Bond: 30%
- Corporate Bond: 35%
- Foreign Government Bond: 17%



Answer :

GinnyAnswer

Final answer:

Diversification in a portfolio is essential to minimize risk and enhance performance.


Explanation:

Diversification in a portfolio is crucial to reduce risk and improve overall performance. By investing in a variety of assets such as stocks and bonds from different sectors and types, investors can minimize the impact of potential losses from any single asset. Warren Buffet advises that diversification through index funds is a wise strategy for most investors.


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