Question

Investing in Coke and Pepsico would be an example of

A) highly correlated stocks.
B) investing in stocks that were not correlated.
C) diversifying by investing in both rather than one or the other.
D) investing in international growth stocks

Answer 1

Investing in Coke and Pepsico would be an example of diversifying by investing in both rather than one or the other.

Step-by-step explanation:

Investing in Coke and Pepsico would be an example of diversifying by investing in both rather than one or the other. When you invest in two companies from the same industry, like Coke and Pepsico, though they are different companies, they are likely to be influenced by similar industry factors.

However, by investing in both, you reduce the risk of relying on the performance of just one company, as they may have different strategies, products, and customer bases, thus increasing the chances of better returns and minimizing losses.