Which of the following statements about diversification is TRUE?

A. Diversification is an investment strategy where you invest all your money in one industry.

B. Diversification helps you analyze how companies are doing in the stock market.

C. Diversification guarantees your investment portfolio will be profitable.

D. Diversification is an investment strategy that mixes a wide variety of investments from different categories within a portfolio.

Answer:

D. Diversification is an investment strategy that mixes a wide variety of investments from different categories within a portfolio.

Explanation

Diversification is a risk management strategy that involves spreading investments across various asset classes, industries, or geographic regions. This helps reduce risk because if one investment underperforms, others may compensate for the loss.

Thus, D is the correct answer, as diversification helps balance risk and return in an investment portfolio