We Can Reduce Volatility by Investing in Less Than Perfectly

question 13

Multiple Choice

We can reduce volatility by investing in less than perfectly correlated assets through diversification because the expected return of a portfolio is the weighted average of the expected returns of its stocks, but the volatility of a portfolio ________.

• A)is higher than the weighted average volatility
• B)is independent of weights in the stocks
• C)is less than the weighted average volatility
• D)depends on the expected return

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Definitions:

Voltage-Gated

Refers to ion channels that open or close in response to changes in membrane potential, critical for nerve impulse conduction.

Node of Ranvier

Gaps in the myelin sheath of nerve fibers where the axonal membrane is exposed, facilitating rapid signal conduction along the neuron.

Axon

The long extension of the neuron that transmits nerve impulses away from the cell body. Compare with dendrite.

Dendrite

A branched extension of a neuron that receives stimuli and conducts impulses toward the cell body.