If two investments are uncorrelated:
A. there is no benefit from diversification.
B. there is no benefit to hedging.
C. diversification reduces risk without changing the expected payoff.
D. diversification reduces both risk and the expected payoff.
C. diversification reduces risk without changing the expected payoff.
You might also like to view...
At full employment there is no
A) unemployment. B) cyclical unemployment. C) avoidable unemployment. D) frictional unemployment. E) structural unemployment.
During the recession phase of the business cycle, business firms become pessimistic about their future earning capacity as do banks. Nominal interest rates fall during recessions. Investment lending could be expected to
A) rise if the change in future earnings is thought to be greater than the change in interest payments. B) stay the same. C) fall. D) fall if the change in future earnings is thought to be greater than the change in interest payments.