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:

Profit Sharing

A business practice where employees receive a share of the company's profits, in addition to their regular salary.

Compensation Items

Refers to the various forms of pay or rewards given to employees for their work, including salaries, bonuses, benefits, and perks.

Organizational Structure

A system that outlines how activities are directed in order to achieve an organization's goals, including the roles, responsibilities, and communication paths.

Negotiation

A dialogue between two or more parties aimed at reaching a consensus or resolving differences.