Spreading involves:
A)Finding assets whose returns are perfectly negatively correlated
B)Adding assets to a portfolio that move independently
C)Investing in bonds and avoiding stocks during bad times
D)Building a portfolio of assets whose returns move together

Question

Quizplus · Accepted Answer

Spreading involves adding assets to a portfolio that move independently, which helps to reduce risk and volatility. Option A refers to diversification through negative correlation, which can be difficult to find. Option C suggests avoiding stocks during bad times, which may not be the best long-term strategy. Option D refers to correlation, which can increase risk rather than mitigate it.

Spreading Involves