An Investor Will Get Maximum Risk Reduction by Combining Assets

question 86

Multiple Choice

An investor will get maximum risk reduction by combining assets that are

• A) negatively correlated.
• B) positively correlated.
• C) uncorrelated.
• D) perfectly, positively correlated.

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Definitions:

Systole

The phase of the heartbeat when the heart muscle contracts and pumps blood from the chambers into the arteries.

Heart

A muscular organ that pumps blood through the circulatory system by rhythmic contraction and expansion.

Pulmonary Trunk

The major blood vessel that originates from the right ventricle of the heart and bifurcates into the left and right pulmonary arteries, carrying deoxygenated blood to the lungs.