To Reduce Risk as Much as Possible, You Should Combine

question 51

Multiple Choice

To reduce risk as much as possible, you should combine assets which have one of the following correlation relationships?

• A)strong positive
• B)slightly positive
• C)slightly negative
• D)strongly negative
• E)zero

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Definitions:

Simple Interest

Interest calculated only on the principal amount, without compounding over time.

Annual Rate

The yearly rate of interest or growth, often applied to loans, investments, and savings accounts.

Treasury Bill

A short-term government security issued at a discount from the face value and matures to its full value at the end of the term.

Simple Interest

Interest determined just on the base amount, not including compounded interest.