Asked by
Kodie Wagner
on Dec 04, 2024Verified
Diversification is most effective when security returns are ________.
A) high
B) negatively correlated
C) positively correlated
D) uncorrelated
Diversification
A risk management technique that mixes a wide variety of investments within a portfolio to minimize the impact of any single asset's performance.
Negatively Correlated
Refers to two variables that move in opposite directions, meaning when one variable increases, the other decreases, and vice versa.
Positively Correlated
A relationship between two variables in which they move in the same direction, meaning as one variable increases, the other also increases.
- Comprehend the principles of diversification and its effects on portfolio risk.
Verified Answer
AZ
Learning Objectives
- Comprehend the principles of diversification and its effects on portfolio risk.