Even If the Correlation Between the Returns on Two Securities

question 34

True/False

Even if the correlation between the returns on two securities is +1.0, if the securities are combined in the correct proportions, the resulting 2-asset portfolio will have less risk than either security held alone.

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Definitions:

Behaviour Modification

A therapy approach that applies principles of learning to change undesirable behaviors to more desirable ones.

Target Behaviours

Specific behaviors or sets of behaviors that are identified for change or intervention within a therapeutic or educational setting.

Variable Reinforcement

A reinforcement strategy in which rewards are given out at unpredictable intervals or after an unpredictable number of responses, enhancing the persistence of the behavior.

Baseline Data

Initial data collected before an intervention or treatment to compare against future data, helping to assess progress or effectiveness.