In Order to Reduce Risk in a Firm, the Firm

question 25

Multiple Choice

In order to reduce risk in a firm, the firm would seek to enter a business that

• A) has high positive correlation with its present business.
• B) has zero correlation with its present business.
• C) has high negative correlation with its present business.
• D) has high negative variation with its present business.

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Definitions:

Public Good

A product or service that is made available to all members of a society, characterized by being non-excludable and non-rivalrous in consumption.

FM Radio Station

A broadcast station that uses frequency modulation to provide radio programming to the public within a certain geographic area.

Excludable

A feature of a product or service that enables the owner to restrict its use by others without obtaining consent.

Rival In Consumption

Describes a good or service whose consumption by one individual prevents simultaneous consumption by other individuals, making it exclusive in nature.