Investors use financial instruments to diversify their portfolios from "summary" of Financial Markets and Institutions, Global Edition by Frederic S. Mishkin,Stanley G. Eakins
Investors often seek to diversify their portfolios as a way to manage risk. This involves spreading their investments across different types of financial instruments to reduce the impact of any individual asset's performance on their overall portfolio. By holding a mix of assets with different levels of risk and return, investors can potentially achieve a more stable and consistent investment performance over time. Financial instruments provide investors with a range of options for diversifying their portfolios. For example, they can invest in stocks, bonds, mutual funds, exchange-traded funds (ETFs), options, futures, and other securities. Ea...
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