Independent Risks Can Be Diversified by Holding a Large Number

question 31

True/False

Independent risks can be diversified by holding a large number of uncorrelated assets with independent risks.

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Definitions:

Income Inequality

Refers to the unequal distribution of wealth and income among the members of a society.

Preferences

In economics, the individual tastes or desires that dictate the choices made by consumers based on the satisfaction or utility they get.

Risk

The uncertainty as to the future returns of a particular financial investment or economic investment.

Occupational Segregation

The division of labor in which certain jobs are more frequently held by members of a particular gender, ethnicity, or race.