Question

What do investors expect from their stock portfolios?

1) Reliable annual cash flow
2) High returns
3) Low risk
4) Diversification

Answer 1

Investors expect reliable cash flow, high returns, low risk, and diversification from their stock portfolios.

Step-by-step explanation:

Investors expect several key factors from their stock portfolios, including:

1. Reliable annual cash flow: Investors look for stocks that provide consistent and predictable dividends or income.
2. High returns: Investors aim to earn a significant return on their investment, exceeding the average market returns.
3. Low risk: Investors seek stocks with lower volatility and a reduced probability of loss.
4. Diversification: Investors diversify their portfolios to spread risk across different types of stocks and investment assets.

Investors can purchase stocks through brokerage firms or online trading platforms. It's important to research and assess the financial health, performance history, and future prospects of companies before investing in their stocks.

Diversification is essential in a stock portfolio as it helps reduce risk by spreading investments across different industries and asset classes. By diversifying, investors can limit their exposure to the performance of a single stock or sector, reducing potential losses and increasing the likelihood of achieving long-term financial success.