The Variance of the Sum of Two Investments Will Be

question 167

True/False

The variance of the sum of two investments will be equal to the sum of the variances of the two investments plus twice the covariance between the investments.

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Definitions:

Wage Disparity

The difference in wages earned by different groups of workers, often due to factors like gender, education, or ethnicity.

Equilibrium Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded in the market.

Efficiency Wage

A higher wage paid by employers to increase productivity by attracting better applicants, reducing turnover, and motivating employees.

Marginal Productivity

The additional output that is produced by adding one more unit of a factor of production, holding other factors constant.