Diversification is most effective when security returns are ________.
A) high
B) negatively correlated
C) positively correlated
D) uncorrelated

Name: Diversification is most effective when security returns are ________. A) high B) negatively correlated C) positively correlated D) uncorrelated
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Question

Quizplus · Accepted Answer

Diversification is most effective when security returns are negatively correlated because it reduces the overall risk of the portfolio by offsetting losses in some securities with gains in others.

Diversification Is Most Effective When Security Returns Are ________