To Reduce Your Risk,you Should Select Stocks Whose Returns Exhibit

question 11

Multiple Choice

To reduce your risk,you should select stocks whose returns exhibit a ________ positive correlation rather than a ________ positive correlation.

• A) high; high
• B) low; high
• C) high; low
• D) low; low

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Definitions:

Diversification

An investment strategy that involves spreading investments among various financial instruments, industries, and other categories to reduce risk.

Protection

Economic policy measures, such as tariffs and quotas, used to limit imports in order to protect domestic industries.

Worse Off

A situation in which an individual or group is in a less favorable or more disadvantageous position than before.

International Trade

entails the exchange of goods and services across international borders or territories, influenced by comparative advantages, exchange rates, and global economic policies.