The reason for its significance to diversify the financial holdings over the financial assets

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Answer 1

Question

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.

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Answer 2

Question

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.

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Answer 3

Question

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.

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Answer 4

Question

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.

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Answer 5

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.

Answer 6

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.

Answer 7

Chapter 18, Problem 1RQ

Summary Introduction

To discuss: The reason for its significance to diversify the financial holdings over the financial assets

Answer 8

Expert Solution & Answer

Explanation of Solution

It is not possible to find the investment that provides the highest return for a particular investment period. Assets that are with a known return will provide a lower overall return as there is less or no risk. The investments that are with a higher return will have a greater risk element as the future performance is not certain. Thus, diversification reduces the risk of the investor to the single asset.