In General, Which Stocks Should Be Combined in a Portfolio

question 43

Multiple Choice

In general, which stocks should be combined in a portfolio, if the goal is to reduce overall risk?

• A)stocks with returns that are positively correlated.
• B)stocks with returns that are negatively correlated.
• C)stocks with returns that are not correlated.
• D)stocks that have the highest expected returns.

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Definitions:

Somatic Nervous System

The part of the peripheral nervous system responsible for carrying sensory and motor information to and from the central nervous system.

Visual Cortex

The part of the brain responsible for processing visual information received from the eyes.

Thalamus

A brain structure that acts as a relay station for sensory and motor signals to the cerebral cortex, with the exception of olfactory signals.

Amygdala

A part of the limbic system within the brain that is involved in emotions, decision-making, and memory processing.