As Long as the Coefficient of Correlation Between Two Stocks

question 24

True/False

As long as the coefficient of correlation between two stocks is less than +1,some reduction in risk can be obtained by combining the securities.

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Definitions:

Omission

The act of leaving something out or not including something.

Reasonable Person

A hypothetical individual who exercises average care, skill, and judgment in conduct and is often used as a standard for determining negligence.

Abnormally Dangerous Activity

Activities that inherently involve a high risk of causing significant harm, where the party conducting the activity may be held strictly liable for any damages.

Discharge of Fireworks

The act of igniting fireworks, which can be subject to local regulations or laws governing their use.