Question
Diversification reduces risk _____. only if assets with smaller variances are added to the portfolio only if the correlation between every pair of risky assets
Diversification reduces risk _____.
| only if assets with smaller variances are added to the portfolio | ||
| only if the correlation between every pair of risky assets is approximately zero | ||
| because the variance of large portfolios is determined more by covariances than variances | ||
| only if the risk-free asset is added to a portfolio of risky assets |
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
