Which of the Following Statements Is True in the Context

question 62

Multiple Choice

Which of the following statements is true in the context of diversification?

• A)As long as the return on different investments is not perfectly positively correlated, financial intermediaries can diversify away significant amounts of portfolio risk.
• B)As long as the return on different investments is not perfectly negatively correlated, financial intermediaries can diversify away significant amounts of portfolio risk.
• C)As long as the return on different investments is perfectly positively correlated, financial intermediaries can diversify away significant amounts of portfolio risk.
• D)None of the listed options are correct.

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Definitions:

Existing Strategy

A previously formulated plan or approach that an individual, group, or organization follows to achieve specific goals or outcomes.

Crisis Situation

A complex and urgent scenario that requires immediate attention and action to prevent or mitigate disaster.

Decisive

Characterized by or displaying no hesitation; resolutely determined.

Innovative Actions

Activities or initiatives that introduce new methods, ideas, or products.