In terms of investment strategy, what does diversification help to minimize?

Diversification is a key investment strategy used to spread an investor's capital across a variety of assets or asset classes. This approach minimizes investment risks by reducing the potential negative impact of any single asset's poor performance on the overall investment portfolio.

When an investor diversifies, they are not putting all of their funds into one type of investment, which may be subject to volatility or market fluctuations. Instead, a diversified portfolio might include stocks, bonds, real estate, and other asset classes. This distribution allows for gains in some areas to offset losses in others, thereby mitigating overall financial risk.

The other options—investment opportunities, marketing expenses, and operational costs—do not align with the core objectives of diversification. Investment opportunities pertain to the number and variety of potential assets to invest in but do not directly correlate with risk minimization. Marketing expenses and operational costs are related to business functions rather than investment strategies. Thus, diversification’s primary purpose is to help manage and minimize investment risks, which makes the option focusing on investment risks the most accurate choice.