Which of the Following Is Correct

question 7

Multiple Choice

Which of the following is correct?

• A)Investors can reduce the risk in their portfolio by investing in international stocks since they tend to have low correlation with our own stock market.
• B)Combining both stocks and bonds will likely reduce risk in a portfolio because the two assets have low correlation.
• C)Your optimal portfolio is an efficient portfolio with your desired risk level.
• D)All of these statements are correct.

---

Definitions:

Total Equity

The total value of a company's assets minus its total liabilities, representing the owners' equity in the company.

Common Size Cash Flow Statement

A financial statement that presents all line items as a percentage of total cash inflows, facilitating comparison across periods or companies.

Net Income

The amount of money that remains after all expenses, taxes, and costs have been subtracted from a company's total revenue.

Total Equity

The total net worth of a company, calculated as the difference between total assets and total liabilities.