The Benefits of Portfolio Diversification Are Highest When the Individual

question 92

Multiple Choice

The benefits of portfolio diversification are highest when the individual securities have returns that:

• A) vary directly with the rest of the portfolio.
• B) vary proportionally with the rest of the portfolio.
• C) are less than perfectly correlated with the rest of the portfolio.
• D) are countercyclical.

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Definitions:

Ethics

Moral principles that govern a person's behavior or the conducting of an activity.

Society's ATTitude

The collective opinions, values, and dispositions of a community or society towards particular topics or issues.

Market Values

The prevailing rate at which a good or service can be purchased or sold on the open market.

Right and Wrong

Ethical or moral principles that dictate what is considered just and unjust or good and bad behavior.