To Obtain the Maximum Reduction in Risk, an Investor Should

question 5

Multiple Choice

To obtain the maximum reduction in risk, an investor should combine assets that

• A) are negatively correlated.
• B) have a correlation coefficient of negative one.
• C) are uncorrelated.
• D) have a correlation coefficient of positive one.

---

Definitions:

Reward And Punishment

Principles in behavioral psychology, suggesting that behavior can be encouraged by rewards and discouraged by punishments.

Insight

The capacity to gain an accurate and deep understanding of someone or something, often leading to problem-solving or personal growth.

Potential Solutions

Possible answers or methods for solving a problem or dealing with a challenging situation.

Talking Cure

A general term for psychotherapeutic methods that use dialogue between the therapist and the patient to treat psychological disturbances.