The ________ the returns on two securities move together,the ________ benefit there is from diversification.
A)less;more
B)less;less
C)more;more
D)more;greater

Question

Quizplus · Accepted Answer

When the returns on two securities move together, it means they are positively correlated. In this case, diversification will have less benefit as the two securities will tend to go up and down together. On the other hand, if the returns on two securities are less correlated or negatively correlated, diversification will have more benefits as they will not move together, and the portfolio will be less risky.

The ________ the Returns on Two Securities Move Together,the ________

The the Returns on Two Securities Move Together,the