An Investor Who Already Has a Stock Portfolio Can Best

question 19

Multiple Choice

An investor who already has a stock portfolio can best diversify further investment by:

• A) keeping all the money as cash.
• B) holding assets that are negatively correlated with the existing portfolio.
• C) buying stocks with no risk.
• D) depositing the money in a bank.

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Definitions:

Bankers' Acceptance

A short-term financial instrument issued by a company that is guaranteed by a commercial bank.

Treasury Note

A type of U.S. government debt security with a fixed interest rate and maturity between two to ten years.

Eurodollar

U.S. dollar-denominated deposits at foreign banks or foreign branches of American banks, used widely in international lending and financing.

LIBOR

The London Interbank Offered Rate, a benchmark interest rate at which major global banks lend to one another.