Explanation
Correct answer: B.
Choice B is the best answer because it most logically completes the text’s discussion of how stock-market investors regard diversification. In this context, “prudent” means showing sensible judgment. The text defines diversification as the practice of spreading investment funds across many different companies and industries and explains that this practice “protects investors from major losses” when a particular company or sector loses value. This context supports the idea that diversification is regarded as prudent—that is, as a sensible strategy because of the financial protection it provides.
Why the other choices are wrong
Choice A
Choice A is incorrect because describing diversification as “contentious,” or likely to cause disagreement, would contradict the text, which presents diversification as a practice valued by investors for its protective benefits, not as one that prompts dispute.
Choice C
Choice C is incorrect because describing diversification as “unworkable,” or unable to function effectively, would contradict the text, which indicates that diversification successfully protects investors from major losses.
Choice D
Choice D is incorrect because describing diversification as “optimistic,” or expressing confidence in a positive outcome, wouldn’t make sense in context. The text presents diversification as a defensive strategy designed to limit losses, not as one expressing confidence about future gains.