7
AssignmentMultiple Choice

Saving and Investing

Question 7 • EA Academy Civics 9

How do investors benefit from diversification?

Answer
A
Investors buy only long-term, high-risk investments.
B
Investors focus their investments on the most popular assets.
C
Diversification makes it more difficult for businesses to fail.
D
Diversification spreads risk across different industries and assets.

Explanation

Diversification means investing in a mix of different assets and industries rather than putting all your money in one place. If one investment performs poorly, others may perform better, helping reduce the overall risk to an investor’s portfolio. Choice D, “Diversification spreads risk across different industries and assets,” describes this benefit.

AI-written and checked against the verified answer.

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