What is the name of the investing strategy that emphasizes investing in different types of assets to reduce the risk potential?
Answer: (b), diversification
Diversification refers to the investment strategy of investing in different types of assets (growth stocks, bonds, real estate, etc.) to mitigate risk. By diversifying your portfolio, you minimize the possibility that something significant and adverse could affect your investment if it had otherwise been narrowly focused. Short selling refers to an investment strategy which is in essence betting that a stock's price will fall. Put and call investing is the purchase of put options (options betting that the value of the underlying asset will fall) and call options (options betting that the value of the underlying asset will rise). Buying on margin refers to buying a stock primarily with borrowed funds from a stockbroker.
