When We Combine Shares in a Portfolio, the Amount of Risk

question 53

True/False

When we combine shares in a portfolio, the amount of risk that is eliminated depends on the degree to which the shares face common risks and move together.

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Definitions:

Disposal Value

The estimated monetary value of an asset at the end of its useful life.

Annual Cash Revenues

The total money received from sales activities, without accounting for any deductions or costs, over the course of a year.

Hurdle Rate

The minimum rate of return on an investment that is required by a manager or investor to proceed with the investment.

Income Taxes

Taxes imposed by the government on the income generated by businesses and individuals.