You Have a Portfolio of Two Stocks

question 79

Multiple Choice

You have a portfolio of two stocks. As you increase the weight of the lowest risk stock, the risk of your portfolio will:

• A) increase.
• B) decrease.
• C) remain the same.
• D) increase or decrease depending on the correlation.
• E) decrease or remain the same.

---

Definitions:

Compensating Differentials

Wage differences across jobs that reflect the attractive or unattractive aspects of those jobs, serving to equalize the desirability of these positions.

Teacher Quality

Teacher quality encompasses the various attributes of a teacher, including expertise, effectiveness in teaching, and ability to positively influence student outcomes.

Compensating Differential

A difference in wage rates designed to offset the desirability or undesirability of a job or job conditions.

Compensating Differential

A difference in wage rates designed to offset the desirability or undesirability of a job's attributes.