Terry Hamilton has just received $22,000 from an uncle who died and is trying to decide how to invest it. She has done some research and has decided that about 30% of the money should go into large cap stocks, 20% into medium cap stocks, 15% into small cap stocks, 10% into bonds, 10% into foreign stock, and 15% into cash. She thinks that even if one area does not do that well, the rest will so that her overall return will be pretty good. Terry is demonstrating an understanding of what aspect of investing

Respuesta :

Answer:

diversification

Explanation:

Diversification is generally considered not putting all your eggs in one single basket. In other words, by diversifying her investment portfolio, if one basket breaks, only one or a couple of eggs will break. This means that if one company doesn't perform well, the performance of the other companies should offset any losses.

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