Investing in Two Assets with a Correlation Coefficient of 1

question 49

Multiple Choice

Investing in two assets with a correlation coefficient of 1 will reduce which kind of risk?

• A) market risk
• B) unique risk
• C) unsystematic risk
• D) none of these options (With a correlation of 1, no risk will be reduced.)

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Definitions:

Dopamine

Dopamine is a neurotransmitter that plays a key role in motivation, pleasure, and reward, as well as movement and emotional responses.

Catecholamines

Organic compounds including neurotransmitters such as dopamine, norepinephrine, and epinephrine, which play a key role in the body's response to stress or physical exertion.

Cerebellum

A brain structure involved in coordination of voluntary movements, balance, and some aspects of cognition and perception.

Corpus Callosum

A large band of neural fibers connecting the two hemispheres of the brain, facilitating interhemispheric communication.