The Risk of the Portfolio Depends Not Only on the Individual

question 116

Short Answer

The risk of the portfolio depends not only on the individual risks of the assets but also on the ________ between the asset returns.

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Definitions:

Attraction-Similarity Hypothesis

A theory suggesting that people are attracted to others who are similar to themselves in terms of attitudes, values, and interests.

Altruism

The practice of selflessly caring for the welfare of others, often at a cost to oneself.

Fundamental Attribution Error

The assumption that others act predominantly on the basis of their dispositions, even when there is evidence suggesting the importance of their situations.

Dispositions

Inherent qualities of mind and character that influence an individual's habitual responses and behavior.