If the Returns on Different Assets Are Uncorrelated

question 23

Multiple Choice

If the returns on different assets are uncorrelated:

• A) an increase in the number of assets in a portfolio may bring the standard deviation of the portfolio close to zero.
• B) there will be little gain from diversification.
• C) diversification will result in risk averaging but not in risk reduction.
• D) the expected return on a portfolio of such assets should be zero.

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Definitions:

Action Potential

An action potential is a temporary reversal in the electrical charge across a cell's plasma membrane, responsible for the propagation of nerve impulses.

Optogenetics

A biotechnological method that uses light to control cells within living tissue, often neurons, to precisely study and manipulate physiological processes.

Channelrhodopsin-2

A light-sensitive ion channel used in optogenetics for controlling and studying neurons with light.

Halorhodopsin

A light-activated chloride pump used in optogenetics to inhibit neurons by hyperpolarizing their membrane potential.