Combining two negatively correlated assets to reduce risk is known as
A) risk aversion.
B) diversification.
C) valuation.
D) liquidation.

Question

Quizplus · Accepted Answer

Combining two negatively correlated assets to reduce risk is known as diversification. Risk aversion refers to an individual's preference for lower risk investments, valuation is the process of determining the value of an asset or company, and liquidation refers to the process of selling off assets to pay debts. Therefore, the correct answer is B, diversification.

Combining Two Negatively Correlated Assets to Reduce Risk Is Known