The Variance of the Sum of Two Investments Will Be

question 57

True/False

The variance of the sum of two investments will be equal to the sum of the variances of the two investments when the covariance between the investments is zero.

---

Definitions:

Recession

A phase of short-term economic downturn marked by diminished trade and manufacturing activities, usually recognized by a decrease in GDP for two consecutive quarters.

Automatic Stabilizers

Economic measures and initiatives, like taxation and unemployment insurance, that naturally adapt to mitigate the effects of economic changes without direct action from the government.

Discretionary Fiscal Policy

Changes in government spending and taxes to promote full employment, price stability, and economic growth.

Fiscal Policy

Governmental use of spending and taxation to influence the economy.