When Adding a Randomly Chosen New Stock to an Existing

question 64

True/False

When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation between the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio's risk.

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Definitions:

Employment

Refers to the condition of having paid work or the relationship between an employer and an employee where the employee provides labor in exchange for compensation.

Capital

Financial assets or the financial value of assets, such as cash and goods used to generate income or wealth.

Rent

Payment made, typically on a monthly basis, for the use of someone else's property or land.

Complementary Resource

Assets or inputs that are used together with another resource to produce goods or services, increasing each other's value.