Two Risky Assets Can Be Combined to Lower the Overall

question 91

Multiple Choice

Two risky assets can be combined to lower the overall risk of a portfolio. This principle is commonly referred to as

• A) blending
• B) asset allocation
• C) diversification
• D) portfolio segmentation

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Definitions:

Segmented Income Statement

A financial statement that breaks down revenue, expenses, and profits by specific segments, departments, or products within a company.

Contribution Format

A method of income statement presentation where all variable costs are subtracted from sales to find the contribution margin, followed by the deduction of fixed costs to determine net operating income.

Traceable Fixed Expenses

Fixed costs directly associated with a specific department or product, which would disappear if the department or product were eliminated.

Break-even

The point at which total revenues equal total costs, resulting in no net loss or gain.