Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 13 - Saving, Investment, and the Financial System - Questions For Review: 2

Answer

People who own stocks and bonds should diversify their portfolio because then they will only have small stakes so even if one stock is falling one may be on the rise. Mutual funds already do this by investing in a portfolio of stocks.

Work Step by Step

Don't put " all your eggs in one basket" it is optimal to diversify your portfolio when investing to reduce risk and see better returns in the long run.
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