If Two Events Are Perfectly Positively Correlated,then

question 9

Multiple Choice

If two events are perfectly positively correlated,then

• A) diversification is not necessary since there is no risk.
• B) diversification eliminates all risk.
• C) diversification does not reduce risk at all.
• D) diversification only cuts the risk in half.

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Definitions:

Note Payable

A written promise to pay a specific amount of money, usually with interest, by a certain date.

Promissory Note

A written promise to pay a specified amount of money on demand or at a definite time.

Current Liability

A company's debts or obligations that are due within one year or within the normal operating cycle, whichever is longer.

Operating Cycle

The duration it takes for a company to buy inventory, sell products, and collect cash from sales, showing the efficiency of its operations.