In General, Which Stocks Should Be Combined in a Portfolio

question 43

Multiple Choice

In general, which stocks should be combined in a portfolio, if the goal is to reduce overall risk?

• A)stocks with returns that are positively correlated.
• B)stocks with returns that are negatively correlated.
• C)stocks with returns that are not correlated.
• D)stocks that have the highest expected returns.

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Definitions:

Short-form Merger

A short-form merger is a type of merger that allows a parent company to absorb a subsidiary without the approval of the shareholders of the subsidiary.

Shareholder Approval

The process by which a corporation's shareholders vote on and approve certain corporate actions or decisions.

Revised MBCA

An updated version of the Model Business Corporation Act, which provides a template for state laws regulating the formation, operation, and dissolution of corporations.

Voting Rule

A set of regulations determining the number of votes needed for a proposal to pass, often found in legislative bodies or on boards of directors.