The Amount of Risk Reduction That Occurs Through the Process

question 7

Multiple Choice

The amount of risk reduction that occurs through the process of diversification is determined by:

• A) the extent to which the returns on the assets are correlated
• B) the standard deviations of the assets
• C) the returns on the assets
• D) the expertise of the portfolio manager

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Definitions:

Property Rights

Legal rights defining the ownership and use of resources including land, intellectual property, and personal assets.

Public Good

A product or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

National Defense

The governmental provision of military forces and facilities intended to secure the nation against all potential enemies.

Government-Run

Entities, operations, or programs managed and operated by a government entity or its agents.