Assume the Correlation Coefficient Between the Return on the Existing

question 19

Multiple Choice

Assume the correlation coefficient between the return on the existing project and the return on a proposed foreign project is 1. Also assume the returns on the existing project and the new project are equal, and that the existing project has a lower standard deviation than the proposed project. Under this scenario, undertaking the proposed project will ____ the variance of the firm's overall returns.

• A) decrease
• B) increase
• C) decrease or increase, depending on the exact size of the returns and standard deviations
• D) none of the above

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Definitions:

Attentive

Showing careful attention to the needs or concerns of others; keenly observant.

Evaluate Training

The process of assessing the effectiveness and impact of training programs on participants' skills and knowledge.

Criteria

Criteria are standards or principles by which something is judged or decided.

Behaviour Modelling

A training method that involves showing trainees the correct way to perform a task or behavior through demonstration.