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Explain the Relationship Between Correlation, Diversification, and Risk Reduction

question 94

Essay

Explain the relationship between correlation, diversification, and risk reduction.


Definitions:

Certified Checks

Checks guaranteed by a bank, verifying that there is sufficient funds available in the issuer's account to cover the check.

Teller's Checks

A bank-issued check drawn on the bank's own funds and signed by a teller, typically used when someone needs to guarantee payment.

Refuse

To decline to accept or to reject.

Non-Local Check

A bank check drawn on any bank that is not local to the area where it is being presented for payment.

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