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Explain in detail why is it important for a normal, rational investor to hold a fully...

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Finance

Explain in detail why is it important for a normal, rationalinvestor to hold a fully diversified portfolio. Use preciselanguage (correct finance terminology) and describe what happens inyour portfolio as you go from holding one stock to being fullydiversified. DO NOT use the wording "put all your eggs in onebasket" at any time in your answer or you will suffer a 5-pointpenalty.

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The primary objective of investment is to gain return out of it Lets see a situation where we invest in only one stock means ie we are investing fully in that particular stock which belongs to a specific asset class and industry Some day things go    See Answer
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Explain in detail why is it important for a normal, rationalinvestor to hold a fully diversified portfolio. Use preciselanguage (correct finance terminology) and describe what happens inyour portfolio as you go from holding one stock to being fullydiversified. DO NOT use the wording "put all your eggs in onebasket" at any time in your answer or you will suffer a 5-pointpenalty.

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