Stock Market · True or False
Is it true that diversification reduces the risk of losing everything?
True. Spreading across companies lowers single-company failure risk.
Spreading capital across multiple assets ensures that one failure does not destroy your entire portfolio — it is the simplest and most effective risk reduction tool.
Concentrating all savings in a single stock or sector because it has performed well recently.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- True
- Track
- Stock Market
- Topics
- diversification, risk-management
Also asked as
How diversification reduces investment risk? Why you should not put all money in one stock? Does spreading investments protect your portfolio?
The scenario in full
Diversification reduces the risk of losing everything.
Frequently asked questions
Is it true that diversification reduces the risk of losing everything?
True. Spreading across companies lowers single-company failure risk.
How diversification reduces investment risk?
True. Spreading across companies lowers single-company failure risk. Spreading capital across multiple assets ensures that one failure does not destroy your entire portfolio — it is the simplest and most effective risk reduction tool.
Why you should not put all money in one stock?
True. Spreading across companies lowers single-company failure risk. Spreading capital across multiple assets ensures that one failure does not destroy your entire portfolio — it is the simplest and most effective risk reduction tool.
Does spreading investments protect your portfolio?
True. Spreading across companies lowers single-company failure risk. Spreading capital across multiple assets ensures that one failure does not destroy your entire portfolio — it is the simplest and most effective risk reduction tool.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.