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pentagon [3]
3 years ago
11

By diversifying, the risk of holding stock

Business
1 answer:
snow_tiger [21]3 years ago
8 0

Answer:   Option C

Explanation: In simple words, diversification refers to the process in which the holder of a portfolio purchases and includes different types of securities with no or negative correlation between them. By doing so, the risk of the portfolio can be reduced  but cannot be eliminated as the systematic risk due to the market inefficiencies cannot be eliminated.

It is evident that over the past two years stocks paid higher returns than bond due to the fact that globalization has increased the market for the companies leading to hoover share which further  results in higher return for stock holders in comparison to bond holders who have a fixed return.

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