Which Type of Correlation Will a Completely Diversified Portfolio Have

question 29

Multiple Choice

Which type of correlation will a completely diversified portfolio have with the market portfolio?

• A)less than one, because it carries only market risk
• B)less than one, because it carries only diversifiable risk
• C)equal to one, because it carries only diversifiable risk
• D)equal to one, because it carries only market risk

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Definitions:

Encoding

The process of transforming perceptions, thoughts, and feelings into memory storage.

Retrieving Information

The cognitive process of recalling stored information from memory.

Adult Assistance

Support or help provided by adults, especially towards children or the elderly, in various contexts such as learning, daily living tasks, or caregiving.

Information-Processing Approach

A cognitive development theory that likens human thought to the way computers process information, focusing on mechanisms of learning, memory, and problem-solving.