2. Greater / Less 3. Higher / Lower You have the option to invest in either Coun

Question

2. Greater / Less

3. Higher / Lower

You have the option to invest in either Country A or Country B but not both. You carry out some research and conclude that the two countries are similar in every way except that the returns on assets of different classes tend to move together much more in Country A-that is, they are more highly correlated in Country A than in Country B. Which country would you choose to invest in and why? You should invest in Country as the benefits from diversification are .If everything else is equal, spreading your risk across different asset classes brings greater benefit when the correlation among the returns is .

Explanation / Answer

1. Country B

2. Greater

3. Lower

Country in which there is high correlation then, persons are not able to earn profit.

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