In Order to Reduce Risk in a Firm, the Firm

question 38

Multiple Choice

In order to reduce risk in a firm, the firm would seek to enter a business that

• A) has a high positive correlation with its present business.
• B) has a zero correlation with its present business.
• C) has a high negative correlation with its present business.
• D) has a high negative variation with its present business.

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Definitions:

Economic Growth

A rise in the output of goods and services within an economy across a specified timeframe, generally gauged by Gross Domestic Product (GDP).

Production Possibilities

A curve or frontier that shows the various combinations of different goods that an economy can produce, given its technology and resources.

Absolute Value

The distance of a number from zero on the number line, disregarding any sign it might have, making it always a non-negative value.

Budget Line

A visual depiction of every potential mix of two products that a consumer can purchase, considering their income and the cost of these items.