With a 401K, an employee can spread their contributions to various stocks, mutual funds, and/or bonds. This investment strategy is knows as?

Diversification

Explanation:

A 401k is a type of retirement investment made by the employees. The employees set aside a specific amount of money which could be on autopilot to the 401K account. This money could be simply left as cash which would not result in any growth, or invested to yield returns for the employee. The diversification investment strategy aims at apportioning and spreading the investment to different asset categories.

The asset could be in form of equities, fixed income, or cash equivalents. When the employee spreads their contributions to various stocks, mutual funds, and or bonds he is diversifying his investment and thus will yield greater interest for the investor.

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