Which one of the following ia a defensive strategy.
To determine which one of the following is a defensive strategy, we need to review each option and understand the concept of defensive strategy.
A defensive strategy is a course of action taken by an individual or organization to protect themselves from potential threats or risks. It focuses on minimizing losses, mitigating risks, and maintaining stability.
Now, let's review the options provided to identify the defensive strategy:
1. Investing in high-risk stocks: Investing in high-risk stocks is generally considered an aggressive strategy rather than a defensive strategy. It involves accepting higher levels of risk in order to achieve potentially greater returns.
2. Diversifying investment portfolio: Diversifying an investment portfolio is considered a defensive strategy. By spreading investments across different sectors, asset classes, or geographic areas, it helps to reduce risk by not relying heavily on a single investment.
3. Expanding a business into new markets: Expanding a business into new markets is typically categorized as a growth or expansion strategy, rather than a defensive strategy. It involves seeking new opportunities and increasing market share, which may introduce additional risks.
4. Purchasing insurance coverage: Purchasing insurance coverage is indeed a defensive strategy. Insurance provides protection against potential financial losses resulting from various events such as accidents, property damage, or liability claims.
Based on the definitions and characteristics of defensive strategies, it is clear that option 4, purchasing insurance coverage, is the correct answer.