Which of the following is a benefit of diversification?

Diversification is a fundamental investment strategy that involves spreading investments across various assets to minimize risk. By investing in different asset classes, sectors, or geographical regions, an investor can reduce the impact of any single investment's poor performance on the overall portfolio.

The benefit of reduced overall investment risk primarily arises because different assets often respond differently to the same economic events. For instance, when one sector experiences a downturn, another might perform well, thereby balancing the overall performance of the portfolio. This effect of offsetting losses with gains is what helps lower the total risk for the investor.

On the other hand, guaranteed higher returns is misleading as diversification does not assure higher returns; rather, it aims to achieve a more stable return. Diversification cannot eliminate all financial risk; there will always be some level of risk inherent in investing. Similarly, increasing the likelihood of ownership control is not a direct benefit of diversification, as spreading investments typically leads to more varied holdings that can dilute control.

Thus, the statement regarding reduced overall investment risk accurately reflects one of the core advantages of diversification in financial management.