Which of the following statements is incorrect?(a) Holding on to cash is the most risk-free investment option.(b) To maximize your return on total assets (ignoring financial risk), you mustput all your money into the same type of investment category.(c) Diversification among well-chosen investments can reduce market volatility.(d) Broader diversification among well-chosen assets always leads to a higherreturn without increasing additional risk.
Which of the following statements is incorrect?(a) Holding on to cash is the most risk-free investment option.(b) To maximize your return on total assets (ignoring financial risk), you mustput all your money into the same type of investment category.(c) Diversification among well-chosen investments can reduce market volatility.(d) Broader diversification among well-chosen assets always leads to a higherreturn without increasing additional risk.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Which of the following statements is incorrect?
(a) Holding on to cash is the most risk-free investment option.
(b) To maximize your return on total assets (ignoring financial risk), you must
put all your money into the same type of investment category.
(c) Diversification among well-chosen investments can reduce market volatility.
(d) Broader diversification among well-chosen assets always leads to a higher
return without increasing additional risk.
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