A Portfolio of Stocks Where Each Stock Has a Large

question 50

True/False

A portfolio of stocks where each stock has a large component of independent risk benefits when such stocks are held in a portfolio, because the independent risks are averaged out. This is also referred to as diversification of risks.

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Definitions:

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

Branch Plants

Factories, offices, or other operations set up in a country by a company that is based in another country, often to take advantage of lower production costs.

Low-Wage

Employment that remunerates workers with pay significantly below the average for the labor market.

Deskilling Thesis

The deskilling thesis is a concept in sociology and economics that suggests technology and organizational changes can lead to the devaluation of workers' skills and their displacement by machines or less skilled labor.