the principle of \stock diversification\ means...\nowning many stocks\nowning multiple stocks in the same…

the principle of \stock diversification\ means...\nowning many stocks\nowning multiple stocks in the same sector\nowning stocks across many different sectors\nall of the above\nwhich of the following is an example of sector diversification?\nowning 1 stock in 5 different sectors each\ninvesting in a sector - based etf\nowning stocks in multiple industries in the same sector\nall of the above

the principle of \stock diversification\ means...\nowning many stocks\nowning multiple stocks in the same sector\nowning stocks across many different sectors\nall of the above\nwhich of the following is an example of sector diversification?\nowning 1 stock in 5 different sectors each\ninvesting in a sector - based etf\nowning stocks in multiple industries in the same sector\nall of the above

Answer

Answer:

  1. C. Owning stocks across many different sectors
  2. A. Owning 1 stock in 5 different sectors each

Brief Explanations:

  1. Stock diversification aims to reduce risk by spreading investments across various sectors, not just owning many stocks or stocks in one sector. So owning stocks across many different sectors is correct.
  2. Sector - diversification involves investing in different sectors. Owning 1 stock in 5 different sectors each is an example of this. Investing in a sector - based ETF focuses on one sector, and owning stocks in multiple industries in the same sector is not sector - diversification.