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Suppose you really want to move into your own place, but you need to save $50,000...

Suppose you really want to move into your own place, but you need to save $50,000 for a down payment. In other words, you want to make a very large return in a very short period of time. Would you diversify your portfolio? Why or why not?

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Answer #1

If I want to make a very large return in a very short period of time, I will not diversify my portfolio. Since, diversification of portfolio leads to investing in such a way that the risk is reduced. The loss on one stock is compensated by the return on another stock. Funds are invested in opposite moving securities and hence, with lower risk, the returns are lower as well. Hence, If my requirement is to make a very large return, I will not diversify my portfolio.

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