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Why do many investors hold portfolios of numerous investments? Group of answer choices to maximize returns...

Why do many investors hold portfolios of numerous investments?

Group of answer choices

to maximize returns

to capture voting rights across many different corporations

to receive higher dividend payouts

diversification benefits

to maximize risk

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Answer #1

Answer : diversification benefits

There are two types of risks : systematic risk and unsystematic risk.

systematic risk, also known as market risk can not be completely reduced or diversified away, but unsystematic risk can de reduced by diversified by investing in varied investment.

Unsystematic risk is particular for a firm or industry. so we can reduce it by investing in different sectors or industries

So the purpose is to get diversification benefits and thereby reducing risk.

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