Question

1. Diversification is the inclusion of different asset classes in your portfolio. This will increase the probability that some of your investments outperform expectations while others under perform expectations. Overall a diversified portfolio is more likely to provide satisfactory returns than a overly concentrated portfolio.

True Or false?

2. If you are saving for retirement you should never have risky investments in your portfolio.

True or False?

3. You have made the recommendation to a client to purchase an immediate annuity. This will convert a lump sum investment into periodic payments for a specified number of periods. The payment your client receives will depend on the interest rate offered by the insurance company and the number of periods over which the payments will be made.

True or false?

Answer 1

1)

While using the diversification, correlation and covariance between the returns will be assessed and analysed. This neutralizes the risk and returns of portfolio.

Hence, given statement is True.