The Returns on Asset a Are Strongly,negatively Correlated with Asset

question 63

Multiple Choice

The returns on Asset A are strongly,negatively correlated with Asset B's returns;thus,holding the two assets together will

• A)significantly reduce portfolio risk.
• B)significantly increase portfolio risk.
• C)have little or no effect on portfolio risk.
• D)significantly reduce portfolio return.

---

Definitions:

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, leading to a learned response.

Conditioned Response

A learned reaction to a conditioned stimulus that occurs because of prior conditioning.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually triggers a conditioned response.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention.