To Obtain Benefits from Diversification, We Need to Hold Assets

question 42

Multiple Choice

To obtain benefits from diversification, we need to hold assets where the correlation coefficient is

• A)0.
• B)+1.0.
• C)-1.0.
• D)none of the above.

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Definitions:

Contractual Restrictions

Limitations imposed by a contract, dictating what parties can or cannot do as per the agreement terms.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Stockholders' Claims

The rights of shareholders to a company's assets, often in the context of liquidation or dividend distributions.

Dividend Yield

A financial gauge showing the comparison between a company's annual dividend payments and its share price.