Quiz: Portfolio Diversification

Why is diversification particularly important for professionals like dentists, according to the article?

• a) Dentists often lack the time to manage their investments actively.
• b) Diversification helps dentists maximize their business profits.
• c) It reduces the risk of over investing in their own business.
• d) Dentists face fewer financial risks compared to other professionals.

How does diversification help to manage risk in an investment portfolio?

• a) By concentrating investments in a single asset class.
• b) By increasing the likelihood of losses during market downturns.
• c) By eliminating the need for regular portfolio monitoring and adjustments.
• d) By offsetting potential losses in one asset class with stability or growth in others.

Which of the following is an example of asset class diversification?

• a) Investing all savings in a single stock.
• b) Allocating investments across stocks, bonds, and real estate.
• c) Putting money into multiple stocks of the same industry .
• d) Investing in only one type of mutual fund.

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