Which of the Following Statements Regarding Risk Is (Are) Correct

question 72

Multiple Choice

Which of the following statements regarding risk is (are) correct?
I. A portfolio of two negatively correlated assets has less risk than either of the individual assets, and risk could be further reduced to 0 or below.
II. There is no case where creating a portfolio of assets will result in greater risk than that of the riskiest asset included in the portfolio.

• A) Only statement I is correct.
• B) Only statement II is correct.
• C) Both statements I and II are correct.
• D) Neither statement I nor II is correct.

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Definitions:

Primary Motor Area

A part of the frontal lobe in the brain responsible for the execution of voluntary movements by sending signals to skeletal muscles.

Neuron

A specialized cell transmitting nerve impulses; the basic building block of the nervous system.

Lateralized

Refers to the tendency for some neural functions or cognitive processes to be more dominant in one hemisphere of the brain than the other.

Amygdala

A part of the brain involved in emotion regulation, especially fear and pleasure responses, as well as memory processing.