Which of the Following Securities Could NOT Have Any Benefits

question 7

Multiple Choice

Which of the following securities could NOT have any benefits for diversification with your investment portfolio?

• A)Treasury bills with a correlation coefficient of 0.0 with your portfolio
• B)Alpha Company stock that has a correlation coefficient of -0.25 with your portfolio
• C)Beta Company stock that has a correlation coefficient of 0.50 with your portfolio
• D)All of these choices would reduce risk for your portfolio and therefore show at least some benefit to diversification.

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Definitions:

Licensing

A legal process in which one firm pays to use or distribute another firm’s resources, including products, trademarks, patents, intellectual property, or other proprietary knowledge.

International Markets

Refers to the various markets operating in different countries around the globe, where goods, services, and currencies are exchanged across national boundaries.

Regulation

The act of controlling, directing, or managing activities through rules and standards imposed by authorities.

Diversification

A marketing strategy that seeks to attract new customers by offering new products that are unrelated to the existing products produced by the organization.