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:

Positive

Characterized by or denoting an effect, result, or attribute that is beneficial or conducive to growth or well-being.

Constant Elasticity

A condition where the elasticity, or responsiveness, of a variable does not change regardless of the level of the variable being examined.

Linear Demand

A market demand situation where a product's price and the quantity demanded have a linear relationship.

Curve

In economics, it typically refers to a graphical representation showing the relationship between two variables.