We Can Obtain the Benefits of Diversification If Two Assets

question 34

True/False

We can obtain the benefits of diversification if two assets have less than perfect positive correlation.

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Definitions:

Accounting Equation

The accounting equation is the fundamental framework of double-entry bookkeeping, stating that Assets = Liabilities + Equity, ensuring financial statements are balanced.

Liabilities

Financial obligations or debts that a company owes to external parties or entities.

Stockholders' Equity

The portion of a company's assets that is owned outright by the stockholders, calculated as the difference between total assets and total liabilities.

Increase Assets

Refers to the growth in the economic resources owned or controlled by a business that can produce value.