A Satellite Orbits the Earth Instead of Flying Off into Space

question 12

Multiple Choice

A satellite orbits the earth instead of flying off into space because

• A) rocket thrusters continuously push it towards the earth.
• B) solar reflectors continuously push it towards the earth.
• C) wind sails continuously push it towards the earth.
• D) gravity continuously pulls it towards the earth.

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Definitions:

Business-specific Risks

Refers to the uncertainties or potential financial losses that are directly related to the operations and environment of a particular company or industry.

Diversified Away

The reduction of risk in an investment portfolio by allocating investments among various financial instruments, industries, and other categories to minimize the impact of any single asset or risk.

Perfectly Negatively Correlated

This refers to a relationship between two variables where one variable increases as the other decreases with a correlation coefficient of -1.

Portfolio's Risk

The overall risk associated with holding a portfolio of investments, considering how the risks of the individual investments affect the portfolio as a whole.