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.

---

Definitions:

Refractory Period

The period immediately following a nerve impulse or muscular contraction in which a nerve or muscle is unresponsive to further stimulation.

Sex Hormones

Biological compounds that play crucial roles in sexual development, reproduction, and secondary sexual characteristics in various organisms.

Castration

The removal of the testicles in males or ovaries in females; often leads to sterility and can have significant hormonal effects.

Testosterone

A steroid hormone that plays a key role in the development of male reproductive tissues as well as promoting secondary sexual characteristics such as increased muscle and bone mass.