Melanie was just hired as the risk manager of JKL Company. The company

Melanie was just hired as the risk manager of JKL Company. The company president asked her to make a thorough review of all of the company’s loss exposures.

Melanie noted that many employees were too heavily invested in stock issued by the company in their 401-k plan. Melanie suggested that the employees change some of their investment holdings to mutual funds that invest in stock issued by different companies. The risk control method that Melanie suggested is
A) risk avoidance.
B) duplication.
C) diversification.
D) separation.

ANSWER

Answer: C