Respuesta :
Diversification is commonly used to lower risk (option C).
What is diversification?
Diversification is the process of investing in diverse asset classes so as to reduce non-systemic risks or idiosyncratic . Idiosyncratic risks are the risks that are specific a stock, company or industry. By diversifying a portfolio, non-systemic risks to do not dominate a portfolio, so the risk of the portfolio is reduced.
For example, if a person has a portfolio that is made up of only tech company stocks. If there is a downturn in the tech sector, it might mean a negative return for the portfolio owner. In order to diversify, the person might invest in the stocks of an healthcare company. Imagine that there is a negative report about tech stocks that leads to a crash, the value of of the portfolio would experience a large decline if the portfolio is made up of only tech stocks. The decline in the value would be less if the portfolio is made up of other stocks.
To learn more about diversification, please check: https://brainly.com/question/17681327
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