Which of the Following Statements Is True

question 9

Multiple Choice

Which of the following statements is true?

• A)Two assets that are perfectly negatively correlated can produce a portfolio with zero variance.
• B)Adding an asset to a portfolio by random selection will reduce the risk of a portfolio.
• C)Adding a riskless security to a portfolio will increase its overall risk.
• D)The amount of risk reduction that can be achieved by adding a new security to an existing portfolio increases as the correlation between the expected returns of the new security and the expected returns on the existing portfolio increases.

---

Definitions:

Negative Reinforcer

An aversive event or condition that is removed following a desired behavior, thereby increasing the likelihood of that behavior being repeated.

Aversive Event

An unpleasant or harmful event or experience that can induce behavioral changes or psychological stress.

Escape Response

A behavior aimed at moving away from or avoiding a threatening or unpleasant stimulus.

Kaizen

A Japanese term meaning "change for better" or continuous improvement, it is a process of ongoing, incremental improvements in efficiency, productivity, or quality.