If Two Assets Have a Zero Correlation, Their Returns Will

question 2

Multiple Choice

If two assets have a zero correlation, their returns will:

• A)always move in the same direction by the same amount.
• B)always move in the same direction but not necessarily by the same amount.
• C)move randomly and independently of each other.
• D)always move in opposite directions but not necessarily by the same amount.
• E)always move in opposite directions by the same amount.

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Definitions:

Disinhibition

A reduction in restraint leading to spontaneous and unrestrained behavior typically suppressed by social norms.

Sensation Seeking

The need for varied, novel, and complex sensations and experiences.

Adventure

An undertaking involving risk and excitement, often seen as an opportunity for physical, psychological, or spiritual growth.

Novel Experiences

New and previously unencountered situations or events that can stimulate learning and adaptation.