Which of the Following Statements Is Most CORRECT with Respect

question 19

Multiple Choice

Which of the following statements is most CORRECT with respect to international diversification?

• A)the gains from diversification may be diminished due to combined correlations accompanied by volatility in world markets
• B)world markets always seem to be most uncorrelated when volatility is present
• C)world markets have displayed relatively low and fixed correlations over the last five years
• D)global diversification produces gain even when world markets have correlations value near one.

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Definitions:

Interest

Expenses incurred for the authorization to take out a loan, frequently shown as an annual rate in percentage.

Term Deposit

A financial product offered by banks that earns interest and is held for a predetermined period until it reaches the date of maturity.

Simple Interest Rate

An interest rate calculated only on the principal amount, not on previously earned interest.

Interest

Money paid regularly at a particular rate for the use of money lent or for delaying the repayment of a debt.