Stock a Moves Up When the Portfolio Moves Up and Down

question 81

Multiple Choice

Stock A moves up when the portfolio moves up and down when the portfolio moves down. Stock B moves down when the portfolio moves up and up when the portfolio moves down. A and B move up and down about the same amount.

• A)A and B are equally risky in a portfolio sense.
• B)A is risky because it adds risk to the portfolio, B is not risky because it reduces the portfolio's risk.
• C)A's risk can be diversified away.
• D)A has some of the personality of B.

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Definitions:

Physical Distance

The measurable space between objects or individuals, often influencing social interaction and communication.

Authority's Proximity

Refers to the physical or perceived closeness of an individual to a figure or institution of authority.

Legitimate Authority

The rightful or morally justified power held by an entity or individual, which is recognized and followed by others.

Unconscious Desire

Wishes or wants that influence behavior without becoming part of conscious awareness.