A Portfolio Manager Is Considering Adding Another Security to His

question 73

Multiple Choice

A portfolio manager is considering adding another security to his portfolio. The correlations of the five alternatives available are listed below. Which security would enable the highest level of risk diversification?

• A) 0.0
• B) 0.25
• C) -0.25
• D) -0.75
• E) 1.0

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Definitions:

360-Degree Appraisals

A performance appraisal method that involves feedback from a circle of sources including superiors, peers, and subordinates.

Immediate Supervisor

An individual's direct overseer in a work environment, responsible for overseeing their day-to-day tasks.

Low-Tech

Describes products, technologies, or industries that involve fewer advancements or complexities in their operation, often characterized by manual or simpler processes.

Computer-Based Training

Educational or training programs delivered via a computer, often used for enhancing skills or providing new information.