Explain the following statement. a stock held as part of a portfolio is generally less risky than the same stock held in isolation.

answer !

A stock held as part of a portfolio is generally less risky than one held in isolation because a portfolio would be diversified. A personal portfolio may include 20 different stocks. Since all of your money is not invested in one company, if a single stock drops there is still the remaining 19 stocks to increase in value.

When you have one stock held in isolation it is more risky because your stock value is based on one stock. If that stock goes up you make money, but if it goes down you lose. This is unlike a portfolio because you have a variety of stocks to balance out the gains and losses.

Owning a small business has its advantages and disadvantages. Each entrepreneur must weigh the pros and the cons carefully and decide whether or not the risk is worth the reward. Independence. Entrepreneurs are their own bosses. They make the decisions. They choose whom to do business with and what work they will do.

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