Adding Japanese, Australian, and Italian Stocks to a U

question 52

Multiple Choice

Adding Japanese, Australian, and Italian stocks to a U.S. stock portfolio _____ the portfolio risk because the global portfolio reflects only worldwide _____.

• A) reduces; systematic factors
• B) increases; systematic factors
• C) does not change; correlation
• D) reduces; risk
• E) increases; risk

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Definitions:

Real Output

The production of goods and services valued at constant prices, thus removing the effect of inflation.

Price Level

The calculated mean price level for the entire range of economic goods and services.

Nominal GDP

The gross domestic product measured in current prices, without adjusting for inflation.

Money Supply

The overall count of money resources within an economy at a pinpointed moment, incorporating physical currency as well as balances in savings and checking accounts.