Final answer:
Yes, diversifying investments across various unrelated products decreases overall risk by offsetting the impact of any one event, which is a true statement.
Step-by-step explanation:
It is true that one can diversify away investment risk by investing in many possible unrelated products or entities, such that the impact of any one event decreases the overall risk. Diversification is a strategy that involves spreading investments across various assets to reduce the exposure to any one particular asset or risk. A common example of diversification is investing in mutual funds, which pool money from many investors to purchase a broad range of stocks or bonds. This approach follows the principle of not putting all your eggs in one basket, as it tends to cancel out extreme increases and decreases in value among the assets. Diversification can offset some of the risks of individual stocks rising or falling but cannot eliminate the risk of market-wide losses.