You Have a Portfolio of Two Risky Shares Which Turns

question 104

Multiple Choice

You have a portfolio of two risky shares which turns out to have no diversification benefit.The reason you have no diversification is the returns:

• A)are too small.
• B)move perfectly opposite of one another.
• C)are too large to offset.
• D)move perfectly with one another.
• E)are completely unrelated to one another.

---

Definitions:

Machine-Hours

A measure of the total time that machines are operating, often used as a basis for allocating manufacturing overhead costs.

Markup

The amount added to the cost price of goods to cover overhead and profit, resulting in the selling price.

Selling Price

The amount of money charged to the customer for a product or service, determined by adding a margin to the cost price.

Overhead Applied

The allocation of estimated overhead costs to specific jobs or departments based on a predetermined rate or method.