Stock a Moves Up When the Portfolio Moves Up and Down

question 188

Multiple Choice

Stock A moves up when the portfolio moves up and down when the portfolio moves down. Stock B moves down when the portfolio moves up and up when the portfolio moves down. A and B move up and down about the same amount.

• A) A and B are equally risky in a portfolio sense.
• B) A is risky because it adds risk to the portfolio, B is not risky because it reduces the portfolio's risk.
• C) A's risk can be diversified away.
• D) A has some of the personality of B.

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Definitions:

Business Travelers

Individuals who travel as part of their job or business, often to attend meetings, conventions, or to conduct business with other companies.

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The operation of an aircraft to transport passengers or goods from one location to another.

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A pricing strategy where identical or substantially similar goods or services are sold at different prices to different groups.

Profit-Maximizing Price

The optimal price level at which a company can sell its products or services to maximize its profit, considering factors like demand, costs, and competition.