Which of the Following Statements Is True

question 69

Multiple Choice

Which of the following statements is true?

• A)The fundamental lesson of modern portfolio theory (MPT) is that by taking advantage of its profitability, an FI can diversify considerable amounts of credit risk as long as the returns on different assets are imperfectly correlated.
• B)The fundamental lesson of modern portfolio theory (MPT) is that by taking advantage of its size, an FI can diversify considerable amounts of credit risk as long as the returns on different assets are imperfectly correlated.
• C)The fundamental lesson of modern portfolio theory (MPT) is that by taking advantage of its profitability, an FI can diversify considerable amounts of credit risk as long as the returns on different assets are perfectly correlated.
• D)The fundamental lesson of modern portfolio theory (MPT) is that by taking advantage of its profitability, an FI can diversify considerable amounts of credit risk as long as the returns on different assets are imperfectly correlated

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Definitions:

Compilations

Collections of documents, data, or other materials that are gathered and arranged systematically.

Restatements

Collections of uniform legal principles in specific areas of law that aim to clarify, modernize, and otherwise improve the law, produced by legal scholars and experts.

Morality

A set of principles or standards of behavior that guide the distinction between right and wrong or good and bad behavior.

Ethics

The branch of philosophy that deals with issues of right and wrong in human affairs.