Combining Assets That Are Not Perfectly Correlated Does Affect Both

question 23

True/False

Combining assets that are not perfectly correlated does affect both the expected return of the portfolio as well as the risk of the portfolio.

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Definitions:

Long Run

An economic period in which all inputs, including capital, can be adjusted, allowing firms to fully adapt to market changes.

Output

The total amount of goods and services produced by an economy or a production process over a certain period of time.

Marginal Cost

The cost of producing one additional unit of a product or service, which varies depending on the level of production.

Marginal Revenue

The boost in income derived from selling an extra unit of a good or service.