Which Two Factors Have the Greatest Effect on the Degree

question 30

Multiple Choice

Which two factors have the greatest effect on the degree of risk reduction?

• A) The extent of statistical interdependency between the returns on different investments
• B) The number of securities in the portfolio
• C) The expected return on the constituent investments
• D) The total return on the investments

---

Definitions:

Mechanical Force

A push or pull action resulting from the interaction of physical objects, which can cause an object to move, stop, or change direction.

Torque Converter

A type of fluid coupling that allows the engine to spin somewhat independently of the transmission, used in automatic transmissions to improve smoothness.

Hydrodynamics

The science of forces acting on, or exerted by, liquids, usually, but not always, in confined circuits.

Hydraulics Principles

Fundamental concepts governing the behavior and operation of hydraulic systems, including fluid dynamics, pressure, and flow control.