If the Returns to Mammoth Computer and Stupendous Chemicals Are

question 31

Multiple Choice

If the returns to Mammoth Computer and Stupendous Chemicals are independent (have zero correlation) , adding Stupendous Chemicals to a portfolio already containing Mammoth Computer

• A)reduces the overall portfolio risk.
• B)does not affect the overall portfolio risk.
• C)increases the overall portfolio risk.
• D)affects the overall portfolio risk only if the saver is risk averse.

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Definitions:

Accept Goods

The act of receiving or taking delivery of goods in a manner that conforms with the terms of a contract.

Nonconformity

A deviation or failure to meet specified standards, often relating to quality or performance in products or services.

Replace Defective

The process of substituting goods or services that are flawed or do not meet the contractual specifications.

Commercial Unit

A standard of goods or products that are considered as a single whole for purposes of sale and division, often relevant in transactions and legal contracts.