Which of the Following Is Correct

question 7

Multiple Choice

Which of the following is correct?

• A)Investors can reduce the risk in their portfolio by investing in international stocks since they tend to have low correlation with our own stock market.
• B)Combining both stocks and bonds will likely reduce risk in a portfolio because the two assets have low correlation.
• C)Your optimal portfolio is an efficient portfolio with your desired risk level.
• D)All of these statements are correct.

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Definitions:

Gain or Loss

Gain or loss refers to the financial result from the sale of a capital asset, where a gain occurs if the sale price exceeds the purchase cost, and a loss occurs if the sale price is below the purchase cost.

Sales Price

The amount of money that a buyer pays to purchase a product or service.

Net Proceeds

Net Proceeds refer to the amount of money received from a sale or transaction after all fees, expenses, and costs have been deducted.

Operating Cycle

The period from the acquisition of inventory to the collection of cash from receivables, reflecting a company's efficiency in managing its working capital.