Diversification Is Most Effective When Security Returns Are ________

question 89

Multiple Choice

Diversification is most effective when security returns are ________.

• A) high
• B) negatively correlated
• C) positively correlated
• D) uncorrelated

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Definitions:

Balance Sheet

A summary that encapsulates a business's liabilities, assets, and shareholders' equity at a distinct date.

Worksheet

A paper or electronic document with rows and columns, used for organizing, calculating, and presenting financial information.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Prepaid Insurance

An asset account that represents insurance premiums paid in advance, which have not yet expired at the time of the balance sheet.