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Author Question: If two events are perfectly positively correlated, then A) diversification is not necessary since ... (Read 86 times)

SO00

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on: Jul 1, 2018
If two events are perfectly positively correlated, then
 
  A) diversification is not necessary since there is no risk.
  B) diversification eliminates all risk.
  C) diversification does not reduce risk at all.
  D) diversification only cuts the risk in half.

Question 2

The ability of diversification to reduce risk
 
  A) is greater the more negatively correlated the two events are.
  B) is greater the more positively correlated the two events are.
  C) is greater the more uncorrelated the two events are.
  D) is greater the more risk averse the individual is.
Microeconomics ¦ Perloff ¦ 8th Edition
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cpetit11

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

A


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