To Obtain the Maximum Reduction in Risk, an Investor Should

question 75

Multiple Choice

To obtain the maximum reduction in risk, an investor should combine assets that

• A) are negatively correlated.
• B) are uncorrelated.
• C) have a correlation coefficient of positive one.
• D) have a correlation coefficient of negative one.

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Definitions:

Need for Achievement

A psychological characteristic that drives individuals to strive for success and excellence in their endeavors.

Daydreaming

The act of engaging in spontaneous, fanciful thoughts or fantasies while awake, often unrelated to the immediate physical environment.

Homosexual Woman

A woman who is sexually and/or romantically attracted to other women, also referred to as a lesbian.

Lesbian

A term used to describe a woman who is emotionally and sexually attracted to other women.