Question

During the Renaissance, bankers began to diversify. Explain how diversification reduced the risk that these businessmen faced and how it increased their wealth and lending power.

Answer 1

If the market conditions are normal, diversification is an efficient way to reduce risk. Holding just one type of investment can potentially pose a threat to your investment if the securities of your industry fail. In such conditions, you could lose all of your money.

Step-by-step explanation: