We May Not Be Able to Fully Remove Risk by Diversification

question 61

Multiple Choice

We may not be able to fully remove risk by diversification if:

• A) a completely risk-free asset does not exist.
• B) the asset returns in our portfolio are positively correlated.
• C) buying stock on margin is not allowed by financial regulators.
• D) none of the above

---

Definitions:

Information Overload

Information overload describes a state where an individual is exposed to more information than they can effectively process, leading to overwhelming feelings or decision paralysis.

Proxemics

The study of how humans use space and distance in communication, including personal territory and physical proximity in interactions.

Physical Space

The physical environment or the tangible, external surroundings where human activities occur.

Listening

The act of actively paying attention to sound, with the intent of understanding and often responding to it.