Unless Assets Are Negatively Correlated, Combining Assets into a Portfolio

question 79

True/False

Unless assets are negatively correlated, combining assets into a portfolio will not reduce portfolio risk.

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Definitions:

Competitive

A market structure characterized by a large number of small firms, freedom of entry and exit, and product homogeneity.

Dominant Position

A situation in which a business or entity holds a major share of the market or has a significant influence over the market conditions.

Large Firms

Corporations or enterprises that operate on a large scale, often having significant market power and capitalization.

Monopolistically Competitive

This describes a market structure where many firms sell products that are similar but not identical, allowing for some degree of market power.