A Change in the Correlation Coefficient of the Returns of Two

question 47

Multiple Choice

A change in the correlation coefficient of the returns of two securities in a portfolio causes a change in:

• A) both the expected return and the risk of the portfolio.
• B) only the expected return of the portfolio.
• C) only the risk level of the portfolio.
• D) neither the expected return nor the risk level of the portfolio.

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Definitions:

Defense Mechanism

Unconscious tactics employed to shield oneself from the distress caused by undesirable thoughts or emotions.

Projection

A defense mechanism where an individual attributes their own unacceptable thoughts, feelings, or motives to another person.

Dishonest

Pertains to the act of being untruthful or misleading in one's interactions or statements.

Defense Mechanism

Mental mechanisms used subconsciously to shield oneself from the distress caused by thoughts or emotions that are not socially acceptable.