What Is the Effect on Outcomes If a Portfolio Has

question 29

Multiple Choice

What is the effect on outcomes if a portfolio has statistically independent shares from two companies, and the expected returns are the same for both?

• A) The expected return is halved but the standard deviation remains constant.
• B) The expected return is the same but the standard deviation increases.
• C) The expected return doubles but the standard deviation remains constant.
• D) The expected return is the same but the standard deviation is reduced.

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Definitions:

Neuropsychological Theory

Pertains to theories that integrate principles from both neurological (brain function) and psychological (behavior and thought processes) perspectives to understand human behavior.

Donald Hebb

A Canadian psychologist who proposed theories on the organization of neural circuits in the brain that contribute to learning and memory.

Evolutionary Research

The study of the origins, changes, and continuities in the genetic makeup of organisms across generations, often used to understand adaptive functions in humans and other species.

Personality Traits

Enduring patterns of thoughts, feelings, and behaviors that distinguish individuals from one another, forming the basis of personality.