In Order to Benefit from Diversification, the Returns on Assets

question 46

Multiple Choice

In order to benefit from diversification, the returns on assets in a portfolio must:

• A) be perfectly positively correlated.
• B) be perfectly negatively correlated.
• C) positively correlated but not perfectly.
• D) have the same idiosyncratic risks.

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Definitions:

Socially Toxic

Describes environments or situations that are harmful to psychological well-being, due to factors like bullying, discrimination, or excessive competition.

Psychological Well-Being

The emotional and mental state where an individual feels fulfilled, content, and capable of managing daily stress.

Bullying

Bullying is the use of force, coercion, hurtful teasing, or threat, to abuse, aggressively dominate or intimidate others.

Social Facilitation

The tendency for people to perform tasks better or more efficiently when in the presence of others as opposed to being alone.