We Can Reduce Volatility by Investing in Less Than Perfectly

question 74

Multiple Choice

We can reduce volatility by investing in less than perfectly correlated assets through diversification because the expected return of a portfolio is the weighted average of the expected returns of its shares, but the volatility of a portfolio:

• A)is independent of weights in the shares.
• B)depends on the expected return.
• C)is less than the weighted average volatility.
• D)is higher than the weighted average volatility.

Discuss the causes and effects of population movements and immigration trends.

Explain the role of racism, xenophobia, and social movements in shaping American society.

Understand the effects of Prohibition on American society and economy.

Analyze the economic trends and crises that concluded the 1920s.

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Definitions:

Favorable Supply Shock

An unexpected event that increases the supply of a good or service, leading to a lower equilibrium price.

Short-run Phillips Curve

A graphical representation showing an inverse relationship between the rate of unemployment and the rate of inflation in the short-term.

Unemployment

The situation in which people who are willing and able to work are not able to find employment, often expressed as a percentage of the labor force.

Aggregate-supply Curve

A graph that shows the relationship between the overall price level and the total output produced by firms in an economy.