The Diversification Effect of a Portfolio of Two Shares

question 68

Multiple Choice

The diversification effect of a portfolio of two shares:

• A)increases as the correlation between the shares declines.
• B)increases as the correlation between the shares rises.
• C)decreases as the correlation between the shares rises.
• D)Both A and C.
• E)None of the above.

---

Definitions:

Manufacturer

A person or company that makes goods for sale, typically on a large scale involving machinery.

Term of Copyright

The duration of copyright protection on a work, varying by jurisdiction but generally lasting the life of the author plus a number of years after their death.

Author

An individual who creates and writes literary, musical, or scholarly works, such as books, articles, or compositions.

Productions

The process of creating, manufacturing, or organizing goods and services.