Portfolio Theory Relies on Combining Assets with ________ Return Correlation

question 45

Multiple Choice

Portfolio theory relies on combining assets with ________ return correlation exclusively to reduce risk.

• A)highly positive
• B)low
• C)zero
• D)none of the above

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Definitions:

Investment

In economics, spending for the production and accumulation of capital and additions to inventories.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up over time.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.

Absolute Value

The distance of a number from zero on the number line, without considering direction.