Diversification Has Value That Results from Risk Reduction That Occurs

question 11

Multiple Choice

Diversification has value that results from risk reduction that occurs when:

• A) the returns on the combined assets are perfectly correlated
• B) the returns on the combined assets are inversely related to the business cycle
• C) the returns on combined assets are uncorrelated
• D) none of the above

Understand the impact of cost changes on market supply and quantity.

Analyze the influence of public opinions and expert advice on financial decisions.

Understand the impact of input price changes on the supply curve and market prices.

Identify how changes in substitute goods' prices affect market demand and equilibrium.

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Definitions:

Expectancy Theory

A motivational theory suggesting that individuals are motivated to act based on the expected outcomes of their actions.

Motivation Components

The various elements that drive an individual's behavior towards achieving specific goals, including intrinsic and extrinsic motivators.

Lower-order Need

Basic physiological and safety needs that individuals seek to fulfill before addressing more complex desires or psychological aspects.

Higher-order Need

Advanced psychological needs that go beyond basic physical requirements, such as social belonging, esteem, and self-actualization, according to Maslow's hierarchy.