When Adding New Securities to an Existing Portfolio, the Higher

question 50

True/False

When adding new securities to an existing portfolio, the higher or more positive the degree of correlation between the new securities and those already in the portfolio, the greater the benefits of the additional portfolio diversification.

---

Definitions:

Hierarchical Structure

The organization of power and authority in a family.

Power

The ability or capacity to direct or influence the behavior of others or the course of events.

Cutoff

A predetermined point or limit beyond which something does not proceed or is not allowed.

Disengaged

lacking interest, involvement, or commitment; often used to describe students or employees who are not actively participating.