Which two of the following provide useful rules to assess the degree of risk reduction (provided there is not perfectly positive correlation)? A) The smaller the number of securities, the lower the risk. B) The greater the number of securities, the lower the risk. C) The more positive the correlation the better. D) The more negative the correlation the better.
Which two of the following provide useful rules to assess the degree of risk reduction (provided there is not perfectly positive correlation)? A) The smaller the number of securities, the lower the risk. B) The greater the number of securities, the lower the risk. C) The more positive the correlation the better. D) The more negative the correlation the better.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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8. Which two of the following provide useful rules to assess the degree of risk reduction (provided there is not perfectly positive correlation)?
A) The smaller the number of securities, the lower the risk.
B) The greater the number of securities, the lower the risk.
C) The more positive the correlation the better.
D) The more negative the correlation the better.
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