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When Adding a Randomly Chosen New Stock to an Existing

question 61

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When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation between the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio's risk.


Definitions:

Major Organic Product

The primary product of an organic reaction that is formed in greater quantity than any other products.

Grignard Reagent

A highly reactive chemical compound formed by the reaction of an alkyl or aryl magnesium halide with a metal, used in organic synthesis.

Tertiary Alcohols

Alcohols in which the hydroxyl group (-OH) is bonded to a carbon atom that is itself bonded to three other carbon atoms.

Acid Chlorides

A class of organic compounds derived from acids by replacing a hydroxyl group with a chloride atom, known for their reactivity in forming other derivatives.

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