All things equal, diversification of total risk is most effective when the ROPC associated with each security...

90.2K

Verified Solution

Question

Finance

All things equal, diversification of totalrisk is most effective when the ROPCassociated with each security in the portfolio are __correlated with .
A: Negatively correlated with the market.
B: positively correlated with the market.
C: Uncorrelated with the market.
D: negatively correlated with each other securities included inthe portfolio.
E: positively correlated with each other securities included inthe portfolio.
F: Uncorrelated with each other securities included in theportfolio.

Answer & Explanation Solved by verified expert

4.5 Ratings (614 Votes)

All things equal diversification of total risk is most effective when the ROPC associated with each security in the portfolio are negatively correlated with each other securities included in the portfolio because when there is a negative See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

All things equal, diversification of totalrisk is most effective when the ROPCassociated with each security in the portfolio are __________correlated with ________.A: Negatively correlated with the market.B: positively correlated with the market.C: Uncorrelated with the market.D: negatively correlated with each other securities included inthe portfolio.E: positively correlated with each other securities included inthe portfolio.F: Uncorrelated with each other securities included in theportfolio.