If ABC Inc

question 59

Multiple Choice

If ABC Inc.and XYZ Inc.have returns that are perfectly positively correlated:

• A)Adding XYZ Inc to a portfolio that consists of only ABC Inc.will reduce risk.
• B)Adding ABC Inc to a portfolio that includes only XYZ Inc.will increase risk.
• C)Adding XYZ Inc.to a portfolio that consists of only ABC Inc.will neither increase nor decrease the risk of the portfolio.
• D)Adding XYZ Inc to a portfolio that consists of only ABC Inc.will neither increase nor decrease idiosyncratic risk but will lower systematic risk.

---

Definitions:

Holier-Than-Thou Effect

A cognitive bias where individuals overestimate their moral qualities or behaviors in comparison to others.

Most Likely

Refers to the highest probability or chance of an event or outcome occurring.

Country

A distinct territory defined by geographical borders, governance, and sovereignty, often recognized as a nation or state.

Triandis

Harry C. Triandis was a prominent psychologist known for his work on individualism and collectivism in cultural psychology.