Which of the Following Describes What Will Occur as You

question 86

Multiple Choice

Which of the following describes what will occur as you randomly add stocks to your portfolio?

• A) The nondiversifiable risk will decrease.
• B) Both the diversifiable and nondiversifiable risk will decrease.
• C) The portfolio return will increase.
• D) The diversifiable risk will decrease.

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Definitions:

Cognitive Tendencies

Cognitive tendencies are patterns or biases in thinking and decision-making, such as heuristics or cognitive biases, that influence how individuals interpret information.

Sternberg's Consummate Love

A concept from Robert Sternberg's Triangular Theory of Love, referring to a complete form of love consisting of three components: intimacy, passion, and commitment.

Intimacy

The closeness between individuals in personal relationships, characterized by mutual affection, emotional connection, and trust.

Cognitive-Dissonance Theory

The view that we are motivated to make our cognitions or beliefs consistent with each other and with our behavior.