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Walter Has His Entire Portfolio Invested in the Stock of the Company

question 23

Multiple Choice

Walter has his entire portfolio invested in the stock of the company where he works. He is considering purchasing one of four ETFs, each of which has the same expected return, but has a different correlation with his portfolio. Walter should choose the ETF that has a correlation of:


Definitions:

Social Facilitation

The tendency for an individual's performance on a task to be influenced by the mere presence of others, often leading to improved performance on simple tasks.

Exercise Bike

A stationary piece of exercise equipment that simulates riding a bicycle, used for cardiovascular fitness and endurance training.

Normative Social Influence

The sway of peers that motivates us to adapt our behaviors to be favored and embraced by them.

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms, politics or being similar to others.

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