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:

Night Feeding

The act of feeding an infant or young child during the nighttime hours, which can affect their sleep patterns and overall nutrition.

Sporadic Sleep Patterns

Irregular sleep habits that do not follow a consistent pattern.

REM Sleep

A phase of sleep characterized by rapid eye movements, more dreaming and bodily movement, and faster pulse and breathing.

Circadian Rhythms

Biological processes that occur in a regular, 24-hour cycle, affecting various bodily functions including sleep, hormone production, and metabolism.