Question

what is diversification?
a. deciding how much money to allocate to each asset type
b. choosing the percentage or distribution of investments to make within each asset type
c. choosing assets with regard only to return and not to risk
d. eliminating the risk of making investments

Explanation:

Diversification in finance involves spreading investments across different assets to reduce risk. It includes deciding how much to allocate to each asset - type and the distribution within each type. Option A is about asset - allocation which is part of diversification. Option B is also related as it's about investment distribution within asset types. Option C is incorrect as risk is an important factor in diversification. Option D is wrong as investment risk cannot be completely eliminated.

Answer:

A. Deciding how much money to allocate to each asset type
B. Choosing the percentage or distribution of investments to make within each asset type