Because Every Company Is Almost Certain to Experience a Bad

question 34

Multiple Choice

Because every company is almost certain to experience a bad year or two,holding on to stock for only one year

• A)is not a very sound investment decision.
• B)is a very sound investment decision.
• C)is a good idea for those who may need to liquidate their investment quickly.
• D)diversifies one's portfolio risk.

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Definitions:

Zero Correlation

A statistical measure indicating that two variables do not move in tandem and their relationship is completely random.

Stock Portfolio

A collection of stocks owned by an individual or an institution, curated to achieve specified investment goals.

Bond Portfolio

A collection of bonds held by an investor, designed to diversify risk and achieve specific income objectives.

Perfectly Negatively Correlated

A statistical measure indicating that two variables move in opposite directions with a correlation coefficient of -1.