Two Assets Whose Returns Move in the Same Direction and Have

question 33

True/False

Two assets whose returns move in the same direction and have a correlation coefficient of +1 are each very risky assets.

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Definitions:

Fundamental Attribution Error

The inclination to overly focus on individual traits while disregarding environmental influences when evaluating the actions of others.

Correspondence Bias

The tendency to attribute a person's behavior to their personality or disposition, rather than to external factors.

Stereotyping

The act of making generalized assumptions or beliefs about the characteristics of all members of a group based on simplified or standardized conceptions.

Defensive Attribution

The tendency to blame victims for their misfortune, so that one feels less likely to be victimized in a similar way.