The Key to Diversification Is That the Risks Should Be

question 61

Multiple Choice

The key to diversification is that the risks should be:

• A) positively correlated.
• B) uncorrelated.
• C) negatively correlated.
• D) easy to reduce.

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Definitions:

Manufacturing Costs

Expenses directly related to the production of goods, including direct labor, direct materials, and manufacturing overhead.

Selling and Administrative Expenses

Costs related to the selling of products and the general administration of a business.

Differential Income

The difference in income between two alternative decisions or scenarios, used in managerial decision-making to determine the better financial option.

Variable Cost

Expenses that change in proportion to the amount of goods produced or the volume of sales.