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By investing in a diversified portfolio, an investor will:
Suggested Answer: A
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Among other things, the trade confirmation that Anna receives must stipulate the items described in Selections I and III only. The trade confirmation that Anna receives from GetErDone must stipulate the time and date of the transaction, the number of shares sold, and the price at which they were sold. The exchange or ECN on which the transaction was executed is not provided on the confirmation statement. Whether GetErDone acted as a principal or a broker in the transaction does need to be stipulated, but in this instance GetErDone acted as a broker, not a principal. GetErDone did not itself buy the shares from Anna.
33 comments · newest first
ME
Merilyn
11 months ago
I’m not so sure about that, sounds too good to be true.
VA
Valentin
11 months ago
Wait, can you really increase returns by diversifying?
JA
Jani
12 months ago
Totally agree, risk goes down with diversification!
SH
Shala
12 months ago
I think it can affect expected return too.
DO
Dorian
1 year ago
Diversifying definitely lowers risk.
MA
Marisha
1 year ago
I definitely recall that diversification can't eliminate all market risk, so D seems wrong to me.
IE
Iesha
1 year ago
I feel like option C sounds tempting, but I don't think you can increase expected return just by diversifying.
BR
Brittni
1 year ago
I think we went over a similar question in class, and the answer was that it lowers risk without changing expected return.
BU
Burma
1 year ago
I remember studying that diversification helps reduce risk, but I'm not sure if it affects expected return.
KI
Kimberlie
1 year ago
Wait, I'm confused. Doesn't diversification actually increase expected return in some cases? I'm going to have to re-read that section of the textbook before answering this.
ST
Stefan
1 year ago
Okay, I've got this. Diversification reduces risk without lowering expected return, so the answer must be B. Gotta love those portfolio theory concepts!
GE
Gertude
1 year ago
Hmm, I'm a little unsure about this one. I know diversification is supposed to reduce risk, but I can't quite remember how it affects expected return. Let me think this through carefully.
IN
India
1 year ago
This seems like a pretty straightforward question about diversification. I'm pretty confident I know the answer, but I'll still review my notes just to be sure.
DO
Dominic
2 years ago
Lowering risk and increasing return? Sounds like the financial equivalent of a perpetual motion machine. Where do I sign up?
AL
Alesia
1 year ago
C) lower his risk and increase his expected return.
AN
Angella
1 year ago
That's right! By diversifying, you can lower risk without sacrificing potential return.
LE
Leota
1 year ago
D) eliminate all the market risk associated with his investment portfolio.
RY
Ryan
1 year ago
A) lower his risk without affecting his expected return.
PA
Pa
1 year ago
C) lower his risk and increase his expected return.
EL
Elmira
1 year ago
A) lower his risk without affecting his expected return.
VE
Verda
2 years ago
Diversification, the financial equivalent of not putting all your eggs in one basket. Except in this case, the eggs are your hard-earned money. Better choose wisely, folks!
MO
Moira
2 years ago
Ah, the age-old question of risk and return. If only we could eliminate all market risk and still get great returns. Guess I'll have to settle for the good old diversification strategy.
SH
Shantell
1 year ago
By diversifying, we can lower our risk without sacrificing returns.
LO
Louisa
1 year ago
I agree, it's important to have a mix of investments.
CH
Chi
2 years ago
Diversification is key to managing risk.
PO
Polly
2 years ago
Hmm, this is tricky. I'm pretty sure option B is the correct answer, but I can see how the other options might sound tempting. Gotta love those financial conundrums!
RO
Rosenda
2 years ago
I know investing in a diversified portfolio is important, but the idea of lowering risk and increasing expected return seems too good to be true. C'mon, there's no free lunch in the investment world!
AN
Angella
1 year ago
C) lower his risk and increase his expected return.
CE
Celeste
1 year ago
I agree, it does sound too good to be true. But diversification really does help spread out the risk.
BO
Bonita
1 year ago
A) lower both his risk and his expected return.
DE
Detra
2 years ago
I'm not sure about that. I think investing in a diversified portfolio only lowers risk without affecting expected return.
GO
Goldie
2 years ago
I agree with Stephaine. Diversification helps spread risk across different assets, so it makes sense that it can increase expected return.
ST
Stephaine
2 years ago
I think by investing in a diversified portfolio, an investor will lower his risk and increase his expected return.