When Combining Many Assets into a Portfolio the Correlation Between

question 68

Multiple Choice

When combining many assets into a portfolio the correlation between the variables has a(n) ____ impact on the overall risk of the portfolio than the overall risk of each asset.

• A) larger
• B) equal
• C) smaller
• D) none of the above

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Definitions:

Controllable Variance

The difference between actual costs and budgeted costs that management has the power to influence or control through decisions and actions.

Variable Factory Overhead

Costs in manufacturing that vary with the level of production output, such as utilities and materials used in the production process.

Controllable Variance

The difference between actual budgeted costs and the controllable costs within a budget period.

Fixed Factory Overhead

Indirect manufacturing costs that remain relatively constant regardless of the level of production, such as rent, depreciation, and salaries of factory supervisors.