17
QuizMultiple Choice

N/A — Exam

Question 17 • Personal Finance

Why might an investor avoid putting all money into a single stock?

Answer
A
It eliminates market changes
B
It increases the risk of large losses
C
It guarantees lower returns
D
It prevents diversification benefits

Explanation

Putting all your money into one stock concentrates your investment in a single company. If that company’s stock falls sharply, a large share of your money could be lost; holding different investments can help spread that risk. So the best answer is B, “It increases the risk of large losses.”

AI-written and checked against the verified answer.

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