If ABC Inc and XYZ Inc have returns that are perfectly positively correlated:
A. adding ABC Inc to a portfolio that includes only XYZ Inc will increase risk.
B. adding XYZ Inc. to a portfolio that consists of only ABC Inc. will neither increase nor decrease the risk of the portfolio.
C. adding XYZ Inc to a portfolio that consists of only ABC Inc will neither increase nor decrease idiosyncratic risk but will lower systematic risk.
D. adding XYZ Inc to a portfolio that consists of only ABC Inc will reduce risk.
Answer: B
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If spending increased by $100, and the GDP increased $400 as a result, the MPC must be:
A. 0.70 B. 0.75 C. 4 D. 2
Plant, equipment, software, new housing, and inventories are part of
A. gross national product. B. the value-added approach of calculating GDP. C. gross private domestic investment. D. net exports.
The aggregate production function is Y = 3KL. If there are 30 units of capital and 40 units of labor, aggregate output is
A. 3,600 units. B. 2,500 units. C. 2,100 units. D. 400 units.
A dieter who prefers to eat small portions at his next meal, but chooses a large portion at mealtime when it arrives is:
A. dynamically consistent. B. dynamically inconsistent. C. exhibiting self-control. D. exhibiting a past bias.