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What is the primary purpose of diversifying investments in the context of risk management?
  • a)
    To eliminate all risk
  • b)
    To increase systemic risk
  • c)
    To minimize diversifiable risk
  • d)
    To maximize speculative risk
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
What is the primary purpose of diversifying investments in the context...
Diversifying investments is primarily done to minimize diversifiable risk, also known as unsystematic risk. By spreading investments across different assets or asset classes, investors can reduce the impact of individual asset performance on their overall portfolio, thereby minimizing risk.
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What is the primary purpose of diversifying investments in the context of risk management?a)To eliminate all riskb)To increase systemic riskc)To minimize diversifiable riskd)To maximize speculative riskCorrect answer is option 'C'. Can you explain this answer?
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