When Two Risky Securities That Are Positively Correlated but Not

question 72

Multiple Choice

When two risky securities that are positively correlated but not perfectly correlated are held in a portfolio,

• A) the portfolio standard deviation will be greater than the weighted average of the individual security standard deviations.
• B) the portfolio standard deviation will be less than the weighted average of the individual security standard deviations.
• C) the portfolio standard deviation will be equal to the weighted average of the individual security standard deviations.
• D) the portfolio standard deviation will always be equal to the securities' covariance.

Comprehend the role of creativity and divergent thinking in intelligence.

Recognize the impact of culture and societal factors on the perception and measurement of intelligence.

Understand the practical applications and importance of intelligence in real-world problem-solving and decision-making.

Familiarize with the constructs of mental age, IQ, and the process of standardizing intelligence tests.

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Definitions:

Investment Projects

Initiatives undertaken by companies or individuals to allocate capital in ways expected to yield returns or gains over time, such as purchasing new equipment or expanding operations.

Income Taxes

Taxes imposed by government authorities on the income earned by companies and individuals, a significant component of fiscal policy.

Internal Rate

Often referring to the internal rate of return (IRR), which is the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding costs related to direct production of goods or services.