The Most Important Criteria When Adding New Investments to a Portfolio

question 35

Multiple Choice

The most important criteria when adding new investments to a portfolio is the

• A) expected return of the new investment.
• B) standard deviation of the new investment.
• C) correlation of the new investment with the portfolio.
• D) selection of the risk-free asset.
• E) variance of the risk-free asset.

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Definitions:

Total Surplus

The sum of consumer and producer surplus, measuring the total net benefit to society from trading a good or service.

Supply

The total amount of a specific good or service that is available to consumers, typically influenced by the price level, production costs, and other factors.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the production and consumption of goods and services.

Demand

The quantity of a particular good or service that consumers are willing and able to purchase at various prices during a given period of time.