In General,the Lower the Correlation Between Asset Returns,the Greater the Benefit

question 185

True/False

In general,the lower the correlation between asset returns,the greater the benefit of diversification.

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Definitions:

Operating Cash Flow

The cash generated from the normal operating activities of a business over a specific period.

CCA Class

A category within the Capital Cost Allowance system in Canada that groups depreciable assets based on their type and the rate at which they can be depreciated for tax purposes.

Interest and Taxes

Interest and taxes are financial charges: interest is the cost of borrowing money, while taxes are mandatory contributions levied by governments on individuals and corporations.

NPV

Net Present Value (NPV) is a method used in capital budgeting to evaluate the profitability of an investment or project, by calculating the difference between the present value of cash inflows and outflows.