You Have a Portfolio of Two Risky Stocks Which Turns

question 95

Multiple Choice

You have a portfolio of two risky stocks which turns out to have no diversification benefit. The reason you have no diversification is the returns:

• A) are too small.
• B) move perfectly opposite of one another.
• C) are too large to offset.
• D) move perfectly with one another.
• E) are completely unrelated to one another.

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Definitions:

Restricting Imports

Government policies aimed at reducing the number of goods and services that can be imported into a country to protect domestic industries.

Personal Income

the total earnings received by individuals from all sources before taxes, including wages, salaries, benefits, and investment income.

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Work performed by individuals for wages or salary, especially in the context of the workforce contributing to economic output.

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