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:

Interest Expense

The cost incurred by an entity for borrowed funds, often reported as a non-operating expense on the income statement.