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

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Definitions:

Legitimate President

A president who is officially recognized and has come to power through lawful means.

Barack Obama

The 44th President of the United States (2009-2017), and the first African American to hold the office, known for key policies like the Affordable Care Act and initiatives on renewable energy.

Lawrence V. Texas

A landmark 2003 Supreme Court case that invalidated laws prohibiting consensual same-sex activities in the United States.

Anti-Sodomy Laws

Regulations that criminalize sexual acts considered unnatural or immoral, historically targeting homosexual conduct.