If There Is No Diversification Benefit Derived from Combining Two

question 44

Multiple Choice

If there is no diversification benefit derived from combining two risky stocks into one portfolio,then the

• A)returns on the two stocks must move perfectly in sync with one another.
• B)returns on the two stocks must move perfectly opposite of one another.
• C)stocks must have a zero correlation.
• D)portfolio is equally weighted between the two stocks.
• E)two stocks are completely unrelated to one another.

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Definitions:

Neuro/Biological Focused

Pertains to approaches or studies that center on the biological and neurological underpinnings of behavior and mental processes.

Psychophysiological Data

Information that reflects the relationship between psychological processes and physiological responses.

EEG

Electroencephalogram, a test that measures electrical activity in the brain and is used to diagnose neurological conditions.

Polygraph

A lie detector test that measures and records several physiological indicators such as blood pressure, pulse, respiration, and skin conductivity while the subject is asked and answers a series of questions.