When Many Assets Are Included in a Portfolio or Index

question 14

Multiple Choice

When many assets are included in a portfolio or index the risk of the portfolio or index will be:

• A) greater than the risk of the securities because the correlations are greater than 1.
• B) equal to the risk of the securities because the correlations are equal to 1.
• C) less than the risk of the securities because the correlations are usually less than 1.
• D) unaffected by the risk of securities because their correlations are less than 1.

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Definitions:

Presentation of Food

The art and technique of arranging food to enhance its aesthetic appeal and overall dining experience.

Salivation

The production and release of saliva in the mouth, often in response to the sight, smell, or taste of food.

Sound of a Tone

A specific auditory perception characterized by a steady frequency or pitch, distinguishable from noise by its consistency and musical quality.

Acquisition

In classical conditioning, the initial stage, when one links a neutral stimulus and an unconditioned stimulus so that the neutral stimulus begins triggering the conditioned response.