Owning Two Securities Instead of One Will Not Reduce the Risk

question 40

Multiple Choice

Owning two securities instead of one will not reduce the risk taken by an investor if the two securities are

• A)perfectly positively correlated with each other
• B)perfectly independent of each other
• C)perfectly negatively correlated with each other
• D)of the same category,
• E)g.blue chips

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Definitions:

Argumentation

The process of constructing and presenting arguments, involving reasoning and evidence, to persuade or inform others in a discussion or debate.

Persuade

To induce someone to do or believe something through reasoning or argument.

Explanations

Statements or accounts that make something clear by describing the relevant structure or operation or circumstances.

Counterargument

An argument or set of reasons put forward to oppose an idea or theory developed in another argument.