Solved

When Returns Are Perfectly Positively Correlated, the Risk of the Portfolio

Question 38

Multiple Choice

When returns are perfectly positively correlated, the risk of the portfolio is:

A) zero.
B) the weighted average of the individual security's risk.
C) equal to the correlation coefficient between the securities.
D) infinite.

Related Questions

Q33: The correlation coefficient identifies what causes the

Q34: An investor has calculated the covariance between

Q35: The relevant risk for a well-diversified portfolio

Q36: When constructing a portfolio, standard deviations, expected

Q37: When the covariance is positive, the correlation

Q39: In order to determine the expected return

Q40: The major difference between the correlation coefficient

Q41: Owning two securities instead of one will

Q42: The bell-shaped curve, or normal distribution, is

Q43: Given the following probability distribution, calculate