How Does the Correlation of the Individual Securities' Returns Affect

question 40

Essay

How does the correlation of the individual securities' returns affect the expected return
on a portfolio of securities?

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Definitions:

Species Richness

The variety of species found in a specific ecological community, landscape, or region.

Productivity

A measure of the efficiency of production, often defined as the output per unit of input.

Abundance

The great or plentiful amount of something in a particular environment, often used in ecology to describe the number of individuals of a particular species within a given area.

Organismic Model

Cooperative view of community, described by Clements, in which a community goes through certain stages of development (succession), like the embryonic stages of an organism, and eventually reaches an adult state (climax community).