The Principal of Diversification Involves Investing in a Variety of Assets

question 25

Multiple Choice

The principal of diversification involves investing in a variety of assets with which one of the following being the primary goal?

• A)increasing returns
• B)minimizing taxes
• C)reducing some of the risk
• D)eliminating all of the risk
• E)increasing the variance

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Definitions:

Signal-detection Theory

A means to quantify the ability to discern between information-bearing patterns and random patterns that distract from the information.

Correct Rejection

In signal detection theory, the accurate identification that a signal is not present.

False Alarm

An erroneous alert or notification indicating the presence of a threat or condition that in reality does not exist.

Miss

To fail to hit, reach, catch, or otherwise make contact with something; also used to express a feeling of loss or absence.